Share Name Share Symbol Market Type Share ISIN Share Description
JP Morgan Asian Investment Trust LSE:JAI London Ordinary Share GB0001320778 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -1.50p -0.40% 374.00p 374.00p 377.00p 378.00p 373.00p 378.00p 144,096 16:35:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 3.9 3.9 95.2 357.35

JP Morgan Asian Investment Share Discussion Threads

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The improved performance of the emerging world will be sustained: At 3.9%, emerging -market growth in 2016 was the weakest since the Great Recession. Since then, the external environment for these economies has improved. In particular, growth in the developed world has picked up considerably and commodity prices have risen by more than 60% since the beginning of 2016. As a result, emerging -market growth rebounded to 4.8% in 2017. IHS Markit predicts this growth rate will be sustained in 2018. While the global environment will continue to be growth -supportive, and while some countries will see stronger growth in 2018, other countries and regions will face challenges, and growing debt burdens could become a risk for many of these economies. In Asia, India will recover from its twin policy shocks of demonetization and the imposition of the goods and services tax. At the same time Indonesia, Malaysia, the Philippines, and Vietnam will sustain 5.0‒6.5% growth. Most of the economies in Latin America will also see also better growth in 2018. A wildcard in the 2018 outlook is whether the Chinese government will go to the stimulus well once again when growth slows. Thanks to stable labor market conditions, it appears that financial crisis prevention outweighs a moderate growth slowdown, in the Xi government’s current calculus. A moderate weakening in China’s growth momentum in 2018 thus appears to be in the cards. IHS Markit predicts that China’s growth rate will diminish from 6.8% in 2017 to 6.5% in 2018. On the other hand, Emerging Europe will see slower growth, due to overheating and labor shortages. In the Middle East, the recovery from the oil slump will be slow and in Sub-Saharan Africa the big economies (Angola, Nigeria, and South Africa) will struggle to expand more 1%.
Wondering where Mark Mobius would invest $100,000 right now? “I would put one-third of the amount in commodities, most notably platinum and palladium. Palladium has gone up a bit too high, but it is used as a catalytic converter in gasoline engines, and despite electric cars coming in, gasoline engines are the biggest thing in China. One-third into African stock markets particularly places like Nigeria, Zimbabwe, Kenya and South Africa. The last one-third would be in Vietnam,” Mark Mobius, Executive Chairman, Templeton Emerging Markets Group told Bloomberg in an interview. Palladium, which has rallied 45 per cent this year, and platinum are the “most notable” commodities and are attractive given that they’re used in catalytic converters in automobile engines, said Mobius, the executive chairman of Franklin Templeton’s emerging markets group. In Africa, Mobius said he was keen on stocks from South Africa, Nigeria, Kenya and Zimbabwe. It’s a “great opportunity” to invest in Zimbabwe right now as he expects the market to be opened up and foreign-exchange reserves to rise after the toppling of former president Robert Mugabe. Sharing reasons for his investments into Zimbabwe, the expert said that he expects a stock market correction in the country, which provides a great opportunity. “The reason I said Zimbabwe is that I expect the markets to come down. As you know, it’s all traded in US dollars. The reason it will come down is Zimbabwe is looking to open the markets, they will have some additional foreign reserves, that will allow investors to get out. This will mean that it will be necessary for local investors to be investing in that market, now that they have a tangible asset, so the market will come down, and that will be a great opportunity,” Mark Mobius told the channel. Mobius described Vietnam, where the benchmark VN Index has climbed 41 per cent this year, as “one of the most dynamic” Asian markets. “It’s a small market, a frontier market, but it’s exciting,” he said in a separate interview at the conference. Giving the investors a glimpse into the future of stock markets across the world, Mark Mobius says that emerging markets may be redefined to be called high-growth countries in the next ten years as they are slated to see a lot of demand for consumer durables due to the burgeoning population. Writing specifically about India and China, Mark Mobius explained, “Well, look five or 10 years from now, you’re going to see these consumer markets become bigger than what you see in Europe, in the US. Because look, China and India each have a billion people and their incomes are rising.”
Can emerging markets maintain their momentum? By Graham Smith: When markets surprise, they have a habit of doing so in a big way. This wasn’t supposed to be a great year for emerging markets but, so far, it has been. The MSCI Emerging Markets Index went up by almost a third in US dollar terms over the ten months to the end of October¹. Rising interest rates in the US have the potential to apply a substantial headwind to emerging markets. They make it relatively more attractive for global investors to plant their money in US assets and avoid the additional risks associated with smaller, developing countries. At the same time, higher US rates make it more expensive for nations dependent on foreign loans to service their existing debts and borrow more. As always though, we find ourselves somewhere between two big pulls. On the other end of the rope this time is economic growth. In a developed world where growth of 2% to 3% is considered strong enough to withstand rises in interest rates, the International Monetary Fund’s expectation that emerging markets will continue to grow at a rate of about 5% per annum looks impressive². So where is the growth coming from? For a start, China seems on course to expand by about 7% this year. While that’s a big step down from the 10% growth rate we saw earlier this decade, it’s still enough to belie some extraordinary progress. Online sales of physical goods were 29% higher in the nine months to September compared with the same period in 2016.³ That’s good news for the host of nearby countries that send exports to China. Malaysia, for instance, which sells components used in the latest generation Apple and Samsung smartphones, said last week that exports to China were up 27% year-on-year in September⁴. Then there’s Brazil, in a much weaker position, but with prospects improving. Following a damaging two-year-long recession, a rebound in consumer spending stabilised the economy in the first half of this year ⁵. India, almost the world’s fastest growing large economy in fiscal 2016-17, has slowed as the country absorbs the combined impacts of last year’s cancellation of high value bank notes and the introduction this year of a national goods and services tax. However, these effects are only expected to be transitory, turning positive for the economy longer run according to the World Bank⁶. Since corporate earnings have broadly grown in step with stock market gains this year, emerging markets continue to look attractively valued on a relative basis. At the end of last month, the MSCI Emerging Markets Index traded on 16 times the earnings of the companies it represents, and at a 23% discount to world markets generally. That valuation gap is more or less maintained when using forecast earnings – 13 times for emerging markets versus 17 times for the world⁷. You could, perhaps, explain away these mismatches by the risks that remain. Capital has continued to flow into emerging markets, even as US interest rates have gone up. As in the period 2003 to 2006, emerging markets are enduring rising rates, partly because those rises have coincided with healthy global growth⁸. However, that could still be undone by any factor that sees the US dollar returning to favour, particularly if that factor involves a rise in geopolitical stress or unexpected deterioration in the world growth outlook. That would place renewed pressure particularly on countries with US dollar currency pegs and large debts. Malaysia would be one – its banks are highly dependent on dollar funding⁹. As usual, investors seeking to add growth from emerging markets to their portfolios might do well to spread their risks. Fortunately, emerging markets are a heterogeneous mix, with commodity producers like Russia, Indonesia and South Africa included alongside the increasingly consumer oriented markets of China and India.
31st August 2017 - Portfolio analysis by JP Morgan: The portfolio outperformed the benchmark during the month on the back of positive stock selection. Country allocation was marginally positive, with the positive impact from the overweight in Thailand and the underweight in India being partially offset by the negative impact from our overweight exposure to Indonesia and Korea. China was the strongest contributor, with AAC Technologies benefiting from strong results and growth in the new area of optics, Shenzhou rising on strong first-half results and Ping An continuing to outperform as the government intensified scrutiny on the Tier 2 players. In Taiwan, Eclat Textile re-rated despite posting disappointing results and Himax Technologies (display driver IC) and Largan Precision rose as key beneficiaries from the optical upcycle in both imaging and 3D depth-sensing cameras. Geographical Breakdown: China.......34.9% Korea.......18.7% Hong Kong...12.1% Taiwan......10.0% India........8.7% Indonesia....5.2% Thailand.....3.9% Singapore....2.7% Vietnam......1.9% Malaysia.....1.1%
I have a small holding in this trust and watch fairly closely - trend has been reasonable this year on the whole - dipped over the last month - but over the long term should go in the right direction ...I do share some concerns over china holdings
30th June 2017 - Portfolio analysis by JP Morgan: The Company's net asset value outperformed the benchmark, while the share price performed in line. Stock selection and country allocation contributed positively overall. Stock selection in China was the biggest detractor. AAC Technologies resumed trading on 7 June after being suspended in May, and shares recovered to an extent after the company issued a detailed statement refuting the short seller's allegations. Alibaba continued to outperform on the back of earnings upgrades. Not owning China Mobile and Baidu also contributed positively. Elsewhere, our financial holdings in Hong Kong (AIA Group) and Thailand (K-Bank) added to returns. At the stock level, the top contributor was Eclat Textile in Taiwan, which benefited from positive monthly sales and expectations for a new supply contract with a large e-commerce company. The worst-performing stock was IMAX China. Although the company is delivering on new installations, short-term financial performance is being dictated by the hit/miss of box office titles. Other notable detractors include KEPCO. Following an order to shut down old coal fire plants in May, it was announced in June that the construction of two nuclear plants would be halted. I have written several times to JP Morgan asking for the percentage of the Asian trust held in China to be reduced. Currently 56.6% of this trust is held in Greater China while I would like to see this reduced towards the 40% level while I would like a percentage held in other Indian Sub-Continent and Indo-China Countries and Ex-CIS States.
Euromonitor International’s Vietnam Economy, Finance and Trade Country Briefing, focuses on one of Southeast Asia’s most dynamic and fastest growing emerging markets. Low labour costs when compared to regional peers such as China and Thailand have supported the growth of Vietnam as a manufacturing base and a major electronics exporter in the region. Furthermore, Vietnam has a young population with a bourgeoning middle class and a populace of 93.4 million, which undoubtedly indicates an essential market for consumer goods. Vietnam has continued to maintain its position as one of the star performers in terms of economic growth boosted by strong growth in private consumption, continued rise in foreign investment and growth in exports. However, shortage of skilled labour, low productivity, corruption and rising wages are major challenges faced by businesses and the manufacturing sector, which the government needs to tackle to maintain Vietnam’s overall competitiveness and cement its position as Asia’s next manufacturing hub. Vietnam offers a low cost manufacturing alternative to its regional peers where labour costs are rising: The agricultural, manufacturing and services sectors are all major contributors to the economy. With companies like Samsung and Intel investing significantly in the country, Vietnam has emerged as a key location for high-technology manufacturing in the region; To prevent the hoarding of foreign currency, the State Bank of Vietnam (SBV) cut rates for dollar deposits in 2015 from 0.75% to 0.0%. In the short run, this will help stabilise the foreign exchange and monetary markets. However, in the long run, if not increased, it might cause capital flight and lack of foreign currency; As the US dollar strengthened and the Chinese yuan devalued, the SBV in 2015 devalued the Vietnamese dong four times to increase the country’s export competitiveness. The dollar/dong trading band was also widened twice in August 2015 from 1.0% to 3.0%. Furthermore, in January 2016, in an effort to adopt a more market-based exchange rate regime by setting a daily reference rate versus the dollar, the SBV further devalued the dong. The dong exchange rate has continued to decline against the US dollar; The Vietnamese economy is expected to benefit the most from the Trans Pacific Partnership Agreement (TPPA) that was signed in February 2016. Vietnam’s garments and shoes industries will highly benefit from reduced import duties in the member countries, especially the USA and Japan. The ASEAN Economic Community (AEC) that became official on 31st December 2015 will generate better opportunities for Vietnam to export goods and services to the ASEAN market while the free flow of labour among the ASEAN economies should help ease skilled labour shortage in the country; Vietnam’s relatively low labour costs, a strategic location; and a large manufacturing sector have helped the country emerge as a major electronics exporter in the region. According to trade sources, as of 2015, 50.0% of Samsung’s mobile phones were manufactured in Vietnam. The country also exports large amounts of textiles, oil and agricultural products. According to trade sources, in 2015, Vietnam was one of the world’s largest exporters of rice and the second-largest exporter of coffee. Government continues to enhance business environment: Despite rapidly rising wages, Vietnam’s minimum wage per month remained the third lowest among ASEAN economies in 2015, below that of Thailand and Indonesia. Hence, over the years, Vietnam has experienced an increase in foreign direct investment (FDI) inflows especially in its labour intensive industries. Businesses with manufacturing hubs in China and Thailand are relocating to Vietnam. In 2015, LG Electronics moved its television production base from Thailand to Vietnam. Furthermore, the government has been taking numerous initiatives in enhancing Vietnam’s overall competitiveness; these include a gradual cut in corporate tax rates and reforming the state-owned enterprises (SOEs). Although the government failed to reach its ambitious target of equitizing 500 SOEs by 2015, it succeeded in privatising 94 SOEs between January and September 2015. The corporation tax rate was slashed from 28.0% in 2008 to 20.0% in 2016, which now stands lower than China and on par with Thailand and Cambodia. If the government continues to thrive in enhancing Vietnam’s business environment and help boost economic activity, the country has great potential in developing into Asia’s new manufacturing hub.
Asian economies deliver 60pc of global growth: Growth is picking up in two-thirds of economies in Asia, supported by higher external demand, rebounding global commodity prices and domestic reforms, making the region the largest single contributor to global growth at 60 percent. A new Asian Development Bank (ADB) report forecast on Monday gross domestic product (GDP) growth in Asia and the Pacific to reach 5.7% in 2017 and 2018, a slight deceleration from the 5.8% registered in 2016. Asian Development Outlook (ADO) says: “Developing Asia continues to drive the global economy even as the region adjusts to a more consumption-driven economy in the People’s Republic of China (PRC) and looming global risks.” Yasuyuki Sawada, ADB’s chief economist, said: “While uncertain policy changes in advanced economies do pose a risk to the outlook, we feel that most economies are well positioned to weather potential short-term shocks.” The US, euro area and Japan are expected to collectively grow by 1.9% in 2017 and 2018. Rising consumer and business confidence and a declining unemployment rate have fueled US growth, but uncertainty over future economic policies may test confidence. The euro area continues to strengthen, but its outlook is somewhat clouded by uncertainties such as Brexit. Meanwhile, Japan remains dependent on its ability to maintain export growth to continue its expansion, according to the report. It added the PRC’s growth continues to moderate as the government implements measures to transition the economy to a more consumption-driven model. Overall output is expected to slow to 6.5% in 2017 and 6.2% in 2018, down from 2016’s 6.7%. “South Asia remains the fastest growing of all sub-regions, with growth reaching 7% in 2017 and 7.2% in 2018. In India, the sub-region’s largest economy, growth is expected to pick up to 7.4% in fiscal year (FY) 2017 and 7.6% in FY2018, following the 7.1% registered last FY. “The impact of the demonetization of high-value banknotes is dissipating as the replacement banknotes enter circulation. Stronger consumption and fiscal reforms are also expected to improve business confidence and investment prospects in the country.” The Southeast Asia region will grow 4.8% in 2017 and 5% in 2018, from the 4.7% recorded last year. Commodity producers such as Malaysia, Viet Nam and Indonesia will be boosted by the recovery of global food and fuel prices. Growth in Central Asia is expected to reach 3.1% in 2017 and 3.5% in 2018, on the back of rising commodity prices and increased exports, albeit with large heterogeneity among countries in the region. Countries in the Pacific will reach 2.9% and 3.3% growth over the next 2 years as the region’s largest economy, Papua New Guinea, stabilises following a fiscal crunch and Fiji and Vanuatu recover from natural disasters. Regional consumer price inflation is projected to accelerate to 3% in 2017 and 3.2% in 2018 from the 2.5% in 2016 on the back of stronger consumer demand and increasingly rising global commodity prices. Inflation projections for the next two years, however, are well below the 10-year regional average of 3.9%. Risks to the outlook include higher US interest rates, which will accelerate capital outflows, although this risk is mitigated to some degree by abundant liquidity throughout the region. On the domestic front, increasing household debt in some Asian economies is a rising risk. The risk can be countered through prudent macro prudential policies, such as requiring tighter debt-to-income ratios for loans.
Uncovering hidden dragons: The emerging markets of South East Asia By Kosuke Sogo: When news first broke of our move into Cambodia, people I spoke to were curious as to why we entered a market that was often overlooked by international ad tech vendors and agencies. We started the company wanting to enable marketers, advertisers and publishers in Asia to leverage on modern tools and increase their returns. Our move into Cambodia and similarly Hanoi, is part of that push. May 2017 will be the 20th anniversary of internet connectivity in Cambodia. However, widespread connectivity and usage started to grow only as recent as 2013, coinciding with the rise in popularity of smart mobile devices. This is a population that jumped from dial-up internet to smartphones on broadband, due to lower setup costs and Khmer script capabilities on smart devices. In fact, the recent We Are Social report showed that the number of active social media users in Cambodia stands at almost one-third the total population, an increase of 44% from the previous year. That same report placed internet users at half the population and a similar rate of increment at 43% from the previous year. The country’s ecosystem represents a major opportunity for marketers to engage with their audiences on mobile and social media, including influencer marketing. At the other end of the spectrum, most digital media owners are still finding the best means to monetize their assets, whilst retaining user experience. Ultimately, it is up to foreign companies to take the learnings from Asia in the past to enhance the digital sphere in these emerging markets. This includes solutions already developed to address transparency and viewability issues, along with having the expertise to aid adoption on both sides of the equation. Tale of two cities: Cambodia is one such fast-emerging market in this diverse region, with many similar pockets across Asia. Even cities have differing levels of digital maturity. Take Hanoi as an example. The city predominantly houses local businesses and government organizations. In contrast, Ho Chih Minh City is where the big marketing budgets are, as international businesses dominate the landscape. Likewise, international tech vendors and agencies are concentrated in Ho Chih Minh City, and there is a noticeable level of difference in the standard of digital marketing and online assets compared to Hanoi. Oftentimes, marketers in Hanoi run campaigns with a short-term view, focusing on clicks and impressions. The true value in a company’s digital efforts though, is to have a long-term digital strategy for customer acquisition. Unlocking the region: Southeast Asia should not be approached on a macro-level, and it is important to understand the media ecosystem of each country and even city. There’s no one-size-fits-all solution for this region. For example, countries like Indonesia and Myanmar use social media as their search tool of choice, rather than the more prominent search engines. At the same time, mobile is hands-down their preferred device, opening up endless possibilities for mobile advertising. Compare this to Singapore and Vietnam, where users are almost equally on desktop and mobile devices. Essentially, it’s important to know how each market functions by having feet on the ground. That will pave the way for solutions and strategies needed to unearth the region’s potential.
Emerging markets in Asia are expected to continue to grow in 2017, offering opportunities for investors amid ongoing global political and market volatility. Despite considerable political uncertainties in the near term in the US, the UK and Europe, as well as potential changes to US trade policy under the coming Trump administration, modest improvement in global economic momentum is expected to continue in the year ahead. Against this global backdrop, opportunities can be identified in riskier, higher yielding asset classes, including Asian equities, which can offer better returns for investors seeking to manage market volatility. Geoff Lewis, Senior Asia Strategist at Manulife Asset Management, said: "Despite the political uncertainty following Brexit and the US Presidential election, we're cautiously optimistic about the year ahead. US fixed investment is expected to pick up and global monetary policy is likely to remain accommodative which will alleviate pressures on the equity markets. There are significant opportunities in Asia for investors. The region hasn't been immune to the challenges facing the global market economy, but it's still, in our opinion, the highest quality emerging market in the world and likely to draw increased interest in 2017." Asia (ex-Japan) is expected to outpace the US, Europe and other emerging markets such as Latin America, with 6% gross domestic product growth forecast for 2017. The latest Manulife Investor Sentiment Index (MISI)* also reveals that Asian investor sentiment for investing in Emerging Asia has jumped from 19 in 2015 to 34 in 2016. 2017: A turning point for Asian Equities: 2017 looks to be a turning point for Asian equities, which will generate opportunities for investors. While Asian stock earnings were soft in recent years, earnings are expected to be revised up in the coming year as a result of an improved economic environment as well as supportive fiscal and monetary policies. More broadly, when compared to 2016, capital flows, exchange rates and bond spreads across most of the region are expected to continue to stabilise in 2017, creating a more positive macro environment for equities. Real interest rates in Asia, which constitute the improving inflation outlook, are increasingly more favourable, indicating a lower vulnerability for Asian stocks to future interest rate increases from the US Federal Reserve. Among the Asian markets, opportunities should become available in Chinese equities, as evident by the improving private investment landscape and the first positive Producer Price Index (PPI) reading in 55 months. North Asian markets, such as China, South Korea and Taiwan, are also expected to perform better in the early part of 2017 due to the perceived positive impact of fiscal stimuluses and increased economic activities in the US. The uncertainty over forthcoming elections in Europe may result in an increased volatility in global markets and Southeast Asia should therefore perform relatively better given that its economies are driven largely by domestic consumption and policies, as was observed in 2016. The MISI survey revealed that 80% of investors indicate that the next six months will be a "neutral to good time" to invest in equities. The top three reasons cited by those investors that favour Asian stocks were signs that market conditions are improving (41.5%), a stable market place (38.5%), and low interest and lending rates that drive the asset class (35.8%). Ronald Chan, Chief Investment Officer of Equities Asia (ex-Japan) at Manulife Asset Management, commented: "We believe 2017 could prove a turning point for Asian equities, particularly if China's gradual economic rebound presents positive knock-on effects for other regional economies. As the economic outlook brightens, valuations are also expected to improve, which could offer meaningful gains for opportunistic investors. At Manulife, we see constructive opportunities in Indonesia, China and India equities."
By Sharat Shroff is a portfolio manager on the Matthews Pacific Tiger fund: In Asia, household wealth creation has been a major theme for two decades, particularly in China. We have seen personal wealth grow uninterrupted since the 1997 Asian financial crisis. The rate might have accelerated or decelerated, but we do not see the trend being altered. This growing middle class is an increasingly important driver of business activity in the region, and has been a source of new ideas for the portfolio. For the past two to three years, consumption has supported domestic demand, while investment activity has been grinding lower across many parts of Asia. What has powered Asia's best-performing market in 2016? However, it is also worth noting that in countries like Thailand and Malaysia, household debt has continued to expand, and the tepid outlook for income growth suggests consumption growth may not be as supportive as it has been in the recent past. Yet there are other countries – such as India, Indonesia and the Philippines – where the outlook for income growth and household debt is not overly constraining for continued growth in private consumption. That being said, policymakers and central bankers realise the need to boost investment growth, which has led to vigorous rate cuts in economies like Indonesia, and to hopes for greater fiscal support in other countries like India. Trade and sentiment: Brexit's impact on Asia The purest driver of investment activity is, however, continued emphasis on structural reforms to boost productivity and ease the cost of doing business in any given country. In this regard, progress has been slow and uneven, whether it is reforming state-owned enterprises (SOE) in China or easing land and labour regulations in India and Indonesia. Nonetheless, these are issues that are well-defined and are being gradually addressed. We believe there is an opportunity for Asian businesses and policymakers to clearly set themselves apart from the uncertainty that might impact economic activity globally. Bull Points: • Asia's overall levels of personal wealth have grown uninterrupted since the 1997 Asian financial crisis • Governments are introducing structural reforms Bear Points: • Investment activity has been grinding lower across many parts of Asia • The recovery in earnings across the region remains bumpy
Emerging markets recover, but now for the hard part by Michelle McGagh: Emerging markets have been strong performers this year, but now earnings need to improve, say investment trust managers. Emerging markets have only entered the first leg of a recovery and company earnings need to improve before a genuine turnaround can take hold. Emerging markets have had a rocky few years but investments trusts focused on the sector are among the best performers of 2016. Shares in these trusts have risen 31% on average since the start of the year. The outcome of the EU referendum in June provided a further boost to emerging market investments as the value of sterling fell, however, it is only just the start of the recovery. Carlos Hardenberg, manager of the Templeton Emerging Markets investment trust, said the ‘pendulum was swinging back’ in favour or emerging markets. Shares in the trust are up 42.8% this year, making up all the ground lost in a torrid 2015. Hardenberg took control the fund from veteran emerging market manager Mark Mobius last September. ‘The market always over reacts when the general consensus turns negative,’ said Hardenberg. ‘Share prices are more volatile than underlying earnings. We are seeing industrial production, as a measure of recovery, increasing in emerging markets...if you go country by country, there is a healthy degree of orders. ‘GDP growth is slowly improving and over the next two years markets like Russia and Brazil will see the biggest relative improvements.’ Omar Negyal, manager of the JPMorgan Global Emerging Markets Income trust, targets income rather than capital growth in his fund and said the real recovery in emerging markets will have begun when company earnings stabilise. ‘What we are seeing in emerging markets is the first leg of recovery,’ he said. ‘China is stabilising and there is an improvement in trade balances in emerging markets. For the second leg [of recovery] to come through, earnings have to start to improve. We are at the start of that,' he said. He said improved earnings would help the ‘rerating of high yield equities in the asset class’. China has been the main problem for emerging markets, with slowing growth dragging the sector down. Hardenberg holds 19% of his trust in the country. He said there were still concerns around housing and ‘over capacity in steel and cement that will have to be dealt with in future’. ‘The big negative for emerging markets is the overall impact of global uncertainty and demand and supply in commodity markets,’ said Hardenberg. Former chief economist at the International Monetary Fund Ken Rogoff has also warned of the threat China poses to the global economy due to its high levels of debt. He said there was ‘no question’ that ‘China is the greatest risk’. ‘China has been the engine of global growth,’ he said. ‘China has been really important. But China is going through a big political revolution. And I think the economy is slowing down much more than the official figures show,’ he said. However, the good news is that sentiment towards other emerging markets is becoming more positive and local emerging market currencies are ‘slowly recovery’ and companies are finally keeping ‘capital expenditure down and concentrating on cost management’, said Hardenberg. Emerging companies in mid and small cap - there are more opportunities there,’ said Hardenberg, adding that many tech companies - of which he has been a fan - were ‘leap-frogging’ more established businesses. In particular, Hardenberg said he looked for companies ‘that have sustainable business models in an area with a high barrier to entry’. ‘We are expecting that emerging markets will see a sideways development over the next 12 months and there is a clear risk from China...and there is some danger already priced in,’ he said. Although Asia is the largest geographic weighting in his trust, Hardenberg said he did not ‘have exposure to Chinese banks or insurance companies’ because of their poor asset quality and concerns the companies were ‘hiding how they are restructuring’. China is the concern for Negyal, whose trust has mounted a recovery almost as impressive as Templeton's this year, with the shares up 38.6%. ‘China is very important for emerging markets at a quarter of the asset class and for the rest of the emerging markets it is vital... because it drives the rest of the emerging markets via trade links,’ he said. ‘That’s commodity prices in Latin America or manufactured goods in the rest of Asia. There are very few emerging markets that are isolated from China. From an economic perspective, Latin America will benefit from stabilisation [in China].’ Also important for Negyal is for emerging markets ‘to re-enter growth territory’ to ensure companies can continue to pay dividends. ‘Emerging market dividends and earnings have been under pressure,’ he said. ‘The near term outlook for dividends is still a concern and it is something we want to be cautious about but in the mid and long-term growth opportunities can be seen as well,’ said Negyal.
31st May 2016 - Portfolio analysis by JP Morgan: The trust's share price and net asset value outperformed the benchmark in May. Strong stock selection in Taiwan, India and Korea accounted for the outperformance. The top contributor was Tencent, a Chinese internet play, which reported strong revenue and profit numbers for the first quarter of 2016, helped by a strong momentum in the mobile games division. A number of the portfolio's technology stocks which are focused towards smartphone growth were also strong contributors over the month, stocks such as AAC Technologies, Advanced Semiconductor Engineering and Largan Precision. Our holding in a number of financials in China and India underperformed. Ping An Insurance in China reported strong results, but the market remains concerned about reinvestment risk in the low return environment. China Merchants Bank reported strong results but concerns over higher non-performing loans lead to underperformance.
31st January 2016 - Portfolio analysis by JP Morgan: The fund underperformed the index in January. Poor stock selection in China, Singapore and Korea accounted for underperformance over the month. Asset allocation was negative, as the fund is overweight China (As I have written to JP Morgan many, many times before that in my good opinion it would be best for China to be no more than 20% of the Asian fund instead of the current 31.8%) and underweight outperforming markets such as Malaysia (has Zero% in Malaysia.) The fund is geared, which contributed to negative asset allocation returns. The best performing stock was Airports of Thailand, due to strong passenger arrival numbers and the emergence of low cost airlines. Overweights in Largan Precision, AAC Technologies and Taiwan Semiconductor Manufacturing Company also contributed to returns. Our core internet position in Tencent remained more resilient than peers. China Taiping Insurance, Ping An Insurance and property company China Vanke declined, as did shares in Sino Biopharmaceutical. Phoenix Healthcare and CSPC Pharmaceutical continued to underperform.
31st December 2015 - Portfolio analysis by JP Morgan: The trust's share price and net asset value outperformed the benchmark, due to stock selection in China and Thailand. The biggest detractor was country allocation within ASEAN (overweight Thailand and underweight Malaysia and Singapore) and an overweight in China. China Vanke, China's largest homebuilder, outperformed following a change of ownership as the largest shareholder, China Resources, was replaced by Shenzhen Jushenghua. Airports of Thailand performed well as it raised its net profit numbers on increased air traffic and tourism numbers. ASE in Taiwan rose after Siliconware Precision announced that it would discuss the offer made by ASE. Changan Auto rallied as auto sales for both domestic and foreign brands rose. On the negative side, China Everbright was hurt by reports of construction delays given stricter environmental standards and concerns over an earnings miss. Largan, Catcher and AAC Technologies (in the Apple supply chain) underperformed, given Apple order cuts and poor sell-through numbers.
Assessing Asia’s Growth Prospects by Robert Horrocks, Chief Investment Officer, Matthews Asia: I think it is fair to say that sentiment toward China, and by extension, Asia, is quite polarized. Some investors see opportunity in the weakness of the second half of 2015, others have doubts over the reality of recent growth rates and are anxious over a slower headline rate of growth in China. It is not hard to see why: the prospect of further tightening by U.S. monetary policy; slowing nominal growth; low margins and disappointing earnings growth; a strong dollar and weak local currencies; increasing credit spreads; and poor momentum in the equity markets. And all of this is happening at a time when valuations, whilst not expensive, cannot be regarded as cheap in absolute terms. Now, let me just suggest that we have some data that should allow us to be more confident over Asia’s ability to weather the world’s deflationary forces. First, current accounts in Asia are generally positive. That means Asia's countries are saving more domestically than they invest domestically. And so, they are relatively less reliant on foreign capital. Second, inflation rates are low across much of the region (again Indonesia and India are exceptions, even though they have been successful at moderate price rises). These low inflation rates mean that Asia’s policymakers have a lot of room to offset deflationary impulses by either monetary policy or even government spending or tax cuts. A return to a more inflationary environment would relieve some pressure on margins, earnings and valuations. The question is: are we seeing any signs of such a response? I think we are. First, there are the natural responses of markets: prices adjust. Most obviously, in the face of deflationary U.S. pressures, Asia's currencies have taken the strain. Then, we have the active response of policymakers. In India, we have seen the central bank successfully squeeze down core inflation rates without too severe an impact on industrial profits (perhaps helped by lower commodity prices).In China, we are seeing authorities raise the growth rate of narrow money, continue to press with financial system reforms, and support the property market. Japan is continuing its policy of reflation and structural reform initiatives. So, in the face of a deflationary U.S. policy, the three Asia giants seem to be leaning in the other direction. The degree of offset is perhaps still small. But talking to clients and investors around the region leaves me to believe that there is no great liquidity crisis. In this context, Asia's long-term growth prospects still look good. High savings rates, large manufacturing bases, reformist governments pursuing financial, legal, and corporate reforms mean that Asia should continue to invest and potentially grow at higher rates than the rest of the world. Over time, this investment will continue to raise real wages across the region. Although the headwinds are currently considerable, Asia's businesses seem to be weathering the storm, and so long as we keep our eye on the long term, the investment environment should offer up some good opportunities.
30th November 2015 - Portfolio analysis by JP Morgan: The trust's net asset value outperformed the benchmark, while the share price underperformed. Stock selection in China and India contributed positively, while stock selection in Korea detracted. Our holding in ikang Healthcare benefited performance as the stock rallied 26% after receiving a USD 1.5 billion acquisition offer from an investor group that includes its main competitor. Our core internet position in Tencent also helped performance given strong mobile gaming and advertising revenue, which are major long-term growth drivers. Financials, such as China Vanke and AIA, performed strongly. Indian auto stocks, such as Martui Suzuki and Tata Motors, rallied on the back of strong domestic car sales in October. Underperformers included Vipshop, Samsung Electronics and ASE. Vipshop fell after missing revenue guidance for the first time in its listed history. Samsung Electronics fell on a weak fourth-quarter outlook given seasonal factors and a continued slowdown in its smartphone segment.
31st October 2015 - Portfolio analysis by JP Morgan: The trust's share price outperformed the benchmark, while the net asset value underperformed. Stock selection was positive in most markets, with the exception of China, while asset allocation was weak. Our overweight position in Samsung Electronics benefited performance as the company announced both a buyback and cancellation of shares in excess of market expectations. Vipshop outperformed as the stock traded higher in anticipation of earnings. An underweight in China Mobile contributed positively, as the stock retreated given its defensive earnings stream in a cyclical rebound. In a reversal from the last quarter, several of the top contributors became detractors in October. Our stock picks in technology, including overweights in Catcher Technology and Largan Precision in Taiwan, hurt returns amid profit-taking in the Apple supply chain. Meanwhile, the government's proposal of larger-than-expected feed-in tariff cuts stirred concerns around profitability for wind and solar power developers. China Longyuan Power Group experienced the biggest decline in a year.
JPMorgan secures backing after arresting Asian trust decline by Daniel Grote: Board of JPMorgan Asian recommends reappointment of managers after investment trust beats benchmark despite suffering losses. The board of JPMorgan Asian (JAI) has recommended the reappointment of the investment trust's managers, after they arrested the decline of the 'problem child' fund. Last year JPMorgan was told it needed to 'deliver significant performance improvement in 2015 in order to justify its reappointment' after years of 'mediocre' results that had left it languishing towards the bottom of the performance tables. In the trust's results for the year to the end of September, chairman James Long said the managers had 'risen to and exceeded' the challenge, and the board would recommend they be reappointed at the trust's 2016 annual general meeting. The trust's net asset value fell 2.9% over the year in a tough 12 months for Asian markets, with the MSCI Asia ex-Japan index falling 6.3% over that period. 'Although the overall return was negative in a difficult market for Asian equities generally, it is at least pleasing to note that the company's return on net assets represents an outperformance against its benchmark... of 3.4%,' said Long. Since the period covered by the results, Richard Titherington has replaced Ted Pulling as manager of the trust, which analysts at Numis had dubbed a 'problem child' for Numis given the underperformance issues. Sonia Yu has remained as manager, working alongside Titherington. However, Numis said JPMorgan was not yet out of the woods. 'We believe it has been positive to see the board publicly highlighting its review of the manager's performance after a period of relative poor performance, demonstrating the benefits of investment companies having an external board,' they said. 'However, it remains a relatively short period of outperformance and we would expect that the board and investors continue to keep a close eye on performance in advance of the regular, three-yearly continuation vote in 2017.'
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