13th Apr 2016 16:30
LONDON (Alliance News) - The Scottish Oriental Smaller Companies Trust PLC said Wednesday it had outperformed the MSCI AC Asia ex Japan Index and the FTSE All-Share Index in the half year to end-February, although it underperformed the MSCI AC Asia ex Japan Small Cap Index.
The trust saw a total return on net asset value per share of 5.9%, up from 4.5% for the same period last year, and above the 3.1% delivered by the MSCI AC Asia ex Japan Index and the FTSE All-Share Index, which fell by 1.2% in total return terms. However, Scottish Oriental came below the 5.4% delivered by the MSCI AC Asia ex Japan Small Cap Index.
Scottish Oriental said Asian markets had generally performed poorly in the six months to February 29, but significant sterling weakness over the period resulted in positive returns for the trust.
"Investor sentiment continued to be influenced by the outlook for the global economy, and specifically by monetary policies in China, the West, and Japan. While the US raised interest rates in December, other developed market policymakers continued to ease with negative interest rates an increasingly common phenomenon," the company said in a statement.
Scottish Oriental said Indonesia had registered a particularly strong performance over the period with interest rate cuts and government stimulus boosting sentiment, with Malaysia the next best performing.
However, the company said China and India performed poorly in the period. In India earnings growth failed to meet market expectations, Scottish Oriental said, whilst in China the slowdown in its economy saw reduced investment activity and significant capital outflows.
"The outlook for Asian markets remains uncertain. 2015 was a year of disappointing corporate earnings caused by the weak global economy and there seems little evidence that 2016 will be any different. The fact that one argument being made for better prospects in 2016 is that emerging market economies could not possibly perform any worse than they did in 2015 shows that there is not much to be positive about," Scottish Oriental added.
Shares in Scottish Oriental closed up 2.5% at 779.40 pence on Wednesday.
By Hannah Boland; [email protected]; @Hannaheboland
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