30th Oct 2020 11:05
(Alliance News) - Asia Dragon Trust PLC on Friday said its poor performance in its financial year was due to effect of the Covid-19 pandemic in the second half, but says it remains confident in the future having changed its portfolio make-up.
Asia Dragon Trust, formerly known as Edinburgh Dragon Trust, aims to identify well-managed businesses in Asia and buy them when they are on attractive valuations. The investor focuses on long-term capital growth.
Asia Dragon Trust posted a net asset value per share at the end of its financial year, August 31, of 474.39 pence, up 3.6% from 458.03 pence per share a year prior.
The company said its NAV total return was 4.7%, down from 9.8% in financial 2019. The MSCI Asia ex Japan Index performed better in the recent year, with a total return of 11%.
The company declared a final dividend of 4.75 pence, flat to the year prior.
"It was a year of two halves for Asian markets. The optimism of the first six months was obviously eclipsed by the spread of Covid-19 across the world in the latter half, which sparked unprecedented market turmoil," Chair James Will said.
"Amid the gloom, a silver lining emerged. The sharp drop in share prices, especially in February and March, gave your Manager the opportunity to buy into attractive stocks that were previously too expensive. These companies were a mix of both old and new economy with businesses tied to long-term trends, such as rising consumption, technological innovation and clean energy," he added.
Asia Dragon Trust 's portfolio make-up has subsequently changed with investments weighted towards Taiwan, South Korea and China, and away from Singapore and India. The trust said the markets in Taiwan, South Korea and China have better growth prospects.
Will said: "After about six months, the world is starting to adjust to a new normal."
"We would expect monetary and fiscal support to continue until economies show concrete signs of getting back on track. This should support stock prices in the short to medium term," he added.
US-China tensions, India-China tensions, and social unrest in Hong Kong all remain a key concern, the company said.
But despite all this, Asia Dragon Trust said, Asia remains the fastest-growing region in the world with structural trends that will play out in the years to come.
"All things considered, I believe Asia's appeal remains undimmed. It is home to many good quality companies, with clear earnings streams, robust balance sheets and healthy cash levels," Will said.
Asia Dragon shares were down 0.2% at 447.91 pence each in London on Friday morning.
By Greg Roxburgh; [email protected]
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