16th Oct 2018 10:17
LONDON (Alliance News) - Scottish Oriental Small Companies Trust PLC on Tuesday said it had fallen behind both of its comparative indices in its most recent financial year due to its exposure to domestic companies in the Philippines.
In the year to August 31, the trust's net asset value total return dropped 2.4%, while on sterling terms the MSCI AC Asia ex Japan Index increased 2.2% and the MSCI AC Asia ex Japan Small Cap Index grew by 1.3%.
Scottish Oriental stressed that these indices were provided for context and are not benchmarks.
The company's net asset value per share at at August 31 had declined 3.0% to 1,156.20 pence from 1,192.68p the year before.
Scottish Oriental described its investment performance as "disappointing" with poor returns stemming from a "relatively large" exposure to domestic companies in Philippines, which suffered from declining consumer confidence in the year.
Stock selection in Indonesia, Malaysia, Pakistan and Sri Lanka also hurt performance, as domestically-focused companies faced difficulties.
"The strengthening US dollar led to a corresponding weakening in Asian currencies. This currency weakness was focused on countries with current account deficits - India, Indonesia, Pakistan, the Philippines and Sri Lanka all saw their currencies weaken notably over the period. With the exception of India, all these markets performed poorly," said Scottish Oriental's portfolio managers.
The company swung to a pretax loss of GBP8.0 million from a GBP49.5 million profit the year before.
Scottish Oriental said it will maintain its 11.5 pence dividend, unchanged from its previous annual dividend.
"The outlook for the current year is encouraging, with the portfolio offering better value and faster growth than at the same point last year," said Scottish Oriental Chairman James Ferguson.
"Opportunities to add to existing holdings are arising at reasonable valuations and we are optimistic this will allow us to deploy the 5.7% held in cash at the year end," Ferguson added.
Moving forward, the company is seeking shareholder permission to change its investment policy and enable it to invest in companies with larger market capitalisations.
Scottish Oriental shares were down 1.0% at 859.74 pence on Tuesday.
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