Aberdeen New Dawn overcomes heightened volatility – Aberdeen New Dawn (ABD) aims to provide shareholders with a high level of capital growth through equity investment in the Asia Pacific countries ex Japan.
Performance
In its annual financial report for the year ended 30 April 2018, the company reported that its NAV rose by 12.9% during a challenging period for Asian equity markets. This was broadly in line with its benchmark, the MSCI All Countries Asia Pacific ex Japan Index (Sterling adjusted), which delivered 13.0% on the same basis. The share price returned 13.3% over the report period, however, as the discount narrowed a little, finishing the period at a discount of 13.4% to the NAV per share of 272.4p.
The period under review saw heightened market volatility in the second half of the year, driven by concerns over a faster than expected rise in interest rates, the impact of a stronger US Dollar on emerging markets, an escalation of trade disputes and a shifting sentiment in the technology sector.
Positive contributions came from holdings in the banking sector, although, as with other managers in the sector, the portfolio’s underweight in technology detracted from performance. The performance of heavyweight stocks such as Chinese companies Tencent and Alibaba meant that, if a portfolio did not hold them or were forced by risk limits not to hold as much in them as the benchmark, it would underperform. However, the sell-off in technology towards the end of the year reduced the impact somewhat and also provided the investment manager with opportunities to increase exposure to this sector.
Dividend
The total dividend for the year will be 4.3p per share (2017: 4.0p). This was an increase of 7.5% on the previous year.
Outlook from chairman, David Shearer
“Having gone through a period of rising equity markets with low volatility, there are a number of reasons for adopting a cautious outlook for markets in the year ahead.
However, the fundamental reasons for investing in Asia remain strong. Intra-regional trade continues to develop, supported by expanding populations and higher disposable incomes. This should help offset the impact on the region from any deterioration in demand for its exports. In India there are encouraging signs of a recovery in consumer demand following the impact of demonetisation and the goods and services tax rollout. More importantly, the government has shown a willingness to take hard decisions that will benefit the economy over the longer term. In China, recent data suggests the authorities are managing the fine balance between maintaining growth and reducing financial risk.
Overall, corporate earnings in Asia remain strong and this should be positive for your Company’s outlook. The underlying holdings are fundamentally sound, with robust businesses that are run by prudent management and backed by healthy balance sheets, thereby enabling them to continue to capitalise on Asia’s longer-term growth potential.”
ABD : Aberdeen New Dawn overcomes heightened volatility