ABERDEEN Asian Income Fund highlighted its relatively low exposure to Chinese stocks as a factor which helped it in its last financial year, as it unveiled results.
However, the Aberdeen Asset Management-run investment trust said that, in spite of “short-term challenges”, it maintained a positive view on “China’s long-term consumer demand potential”.
The trust’s net asset value fell by 5.5 per cent on a total return basis in the year to December 31, 2018. This was a better showing than an 8.3% reverse for the MSCI All Countries Asia Pacific ex-Japan Index on the same basis. However, the fund noted that its performance lagged the MSCI All Countries Asia Pacific ex-Japan High Dividend Yield Index which, on a total return basis, declined by only 3.5%.
Charles Clarke, chairman of the trust, said: “In contrast to 2017, China was one of the weakest markets in the region over the year. The lower exposure to China in the portfolio meant we were spared much of this pain.”
He added: 2018 was a tumultuous time for Asian markets, especially following the good run enjoyed the previous year. The political posturing and protectionism that I mentioned in the half-yearly report dampened returns in the region but sentiment has been improving as the US and China look to reach a mutually agreeable trade agreement. However, investors had to contend with heightened political risks outside Asia, including Brexit and volatile commodity prices, which added to the uncertain environment.”
Aberdeen Asian Income, which is managed by Yoojeong Oh, raised its dividend by 1.7 per cent to 9.15p per share.
Mr Clarke said: “There are no quick fixes for prevailing headwinds so it is likely that market volatility will persist. An immediate resolution to US-China trade tensions appears elusive, given the issues at stake. The global macro backdrop remains weak while further deceleration in China could have a ripple effect across the region. In addition, political uncertainty could ratchet higher as voters in Indonesia and India go to the polls.”
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