11th Dec 2018 11:14
LONDON (Alliance News) - Schroder AsiaPacific Fund PLC on Tuesday reported a rise in annual net assets but "very slightly trailed" its benchmark in "difficult market conditions".
At September 30, the fund's net asset value per share stood at 492.35 pence, compared to 477.38p the year before, a 3.1% increase.
Schroder AsiaPacific's net assets increased 3.1% in the year to GBP825.0 million from GBP799.9 million the year before.
The fund declared a final dividend of 9.50p, a 69% increase from the 5.6p paid out last year.
The fund's NAV produced a total return of 4.2%, broadly in line with the MSCI All Countries Asia excluding Japan Index, its benchmark, which had a total return of 4.4% in the period.
Schroder AsiaPacific's investment manager, Schroder Investment Management Ltd, said the fund had a "solid" first half but saw a "reversal in the summer".
The manager said the "rapid deterioration" in Sino-US relations, rising US interest rates, a stronger dollar and tightening credit conditions all contributed to the "downbeat sentiment" in the second half.
The manager, in particular, said the "tight liquidity" and "US grandstanding" undermined investor confidence in China, leading to a sell off in stocks.
Schroder AsiaPacific said its stock selection was "positive" in Hong Kong, Taiwan and China - due to its underweight exposure. The fund's underweight exposure in the Philippines and India was also a positive.
The fund remained underweight in China, which reduced over the year.
The fund's portfolio remained "significantly" overweight in Hong Kong and moved to an overweight stance in South Korea. Particular sector overweights include consumer discretionary, information technology and real estate, offset by underweights in consumer staples and telecoms.
The manager said: "Regional markets are within a few per cent of the valuation lows seen in late 2015 to early 2016, suggesting that investor caution is already elevated. A destabilising event in China remains a possibility rather than an imminent likelihood, and some progress on US China relations is not out of the question.
"Consequently, the company remains very modestly geared, and we also take comfort from the fact that, at least across the companies held in the portfolio, we consider that cash flows are robust and balance sheets generally in good shape."
Schroder AsiaPacific closed the financial year with a gearing ratio of 2.6%, down from 4.4% at the start of the period. A fund's gearing measures its credit to equity ratio.
Chairman Nicholas Smith added: "I remain optimistic that the region's underlying strengths will turn into further success for the company. Ultimately, it is the companies in which we invest that need to succeed, and I take comfort from how many of them have become dominant regional and global presences in the last decade."
Shares in Schroder AsiaPacific Fund were up 0.5% Tuesday at 404.00 pence each.
Related Shares:
Schroder AsiaPacific Fund