7th Dec 2022 10:33
(Alliance News) - Schroder AsiaPacific Fund PLC on Wednesday said net asset value per share fell and it swung to a pretax loss, citing slowed growth in particularly China due to its government's Covid policy.
The Asia-focused investment fund said NAV per share on September 30 was 546.13 pence, down 15% from 641.72p a year prior. NAV total return in the financial year that ended September 30 was negative 13.6%, marginally outperforming comparator benchmark the MSCI All Country Asia ex Japan Index total return of negative 13.9%.
Shares in Schroder AsiaPacific were down 0.7% to 505.25p each in London on Wednesday morning.
It swung to a pretax loss of GBP141.5 million from a profit of GBP144.1 million a year earlier, but still declared a final dividend of 12.00p, up 24% from 9.70p.
Schroder AsiaPacific cited continued Covid-19 lockdowns in China due to the government's zero Covid policy as having a major economic impact on Asian markets during its financial 2022. It said this underpinned slowed growth, exacerbating ongoing concerns over a reportedly already weak property market, while increased regulation in China also weighed on market sentiment.
On Wednesday came news of a nationwide loosening of Covid restrictions in China, following protests against the hardline strategy that grew into calls for greater political freedoms. Under the new guidelines, some asymptomatic and mild cases of Covid-19 can now quarantine at home, ending a requirement that all positive cases be isolated in centralised government facilities.
Schroder also expressed concern at Chinese leader Xi Jinping being confirmed for his third five-year term at the recent Chinese Communist Party Congress, when the Politburo Standing Committee was "decidedly" one-sided" with Xi loyalists. Schroder AsiaPacific said the lack of countervailing voices to Xi heightens policy risk and indicates challenges surrounding increased regulation in China will persist.
Asian markets were also affected by faster than expected rises in global interest rates, the war in Ukraine and increasing tensions between the US and China over Taiwan, it said.
Schroder AsiaPacific said it remained optimistic in outlook.
"It is the case now more than ever that Asian markets will continue to provide opportunities for those who can identify the winners. We believe that the company continues to be well placed to take advantage of these conditions," said Chair James Williams.
He continued: "Our manager's ability to invest across the region while focusing on high conviction, bottom-up stock ideas driven by strong resources on the ground in Asia gives us confidence that we will return to generating positive returns for shareholders, once market conditions start to improve."
Williams said the optimistic outlook was despite global market uncertainty, noting signs of nearing the end of the tightening cycle of rising inflation and global interest rates.
By Greg Rosenvinge, Alliance News reporter
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