19th Nov 2015 12:52
LONDON (Alliance News) - Aberdeen Japan Investment Trust PLC on Thursday said it had a "challenging" six months in the markets, leading to a hit to its performance.
"Stock market volatility reached levels last seen during the height of the global financial crisis some seven years ago and while there has been some recovery since the end of the period the overall picture has yet to settle down," Chairman Neil Gaskell said in a statement.
The trust's net asset value fell by 16.3% in the six months to September 30, while the benchmark
"The underperformance of 6.9% was caused both by stock selection and the gearing which added about 1.5% to the NAV decline, offset slightly by a positive result of 0.5% from the sterling hedge," the chairman said.
The chairman said that the "China induced turmoil" is still in progress, while the reforms pursued by Japan's prime minister, Shinzo Abe, have seen their momentum weaken of late.
"However, Abe has refocused on the economy more recently, announcing a second phase of fiscal, monetary and economic reform, and the fall in commodity prices is also helpful for Japan. The Bank of Japan has pledged to continue its quantitative easing for as long as it takes to achieve stable inflation of about 2% pa. There is also the prospect of the Trans-Pacific Partnership agreement at last being implemented," Gaskell said.
"Japan will not be immune in the short term to international uncertainties but the overall outlook in Japan is for slow but continuing progress in long term growth prospects and a robust corporate sector with strong profitability, cash flows and increasing dividends combined with steadily improving corporate governance. Against this background, the board remains confident that the manager's active engagement on the ground with a small, focussed portfolio of strong and well managed companies - the 'best of breed'- the fundamentals of which have not changed despite the current turmoil, will continue to deliver outstanding long term value," Gaskell added.
Shares in the trust were down 0.7% at 458.00 pence on Thursday.
By Samuel Agini; [email protected]; @samuelagini
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