Invesco Asia Trust posts solid half-year

Invesco Asia Trust released its half-yearly financial report for the six months to 31 October on Wednesday, reporting a net asset value total return of 33.6%.

The company’s share price total return was 37.1%, compared to its benchmark index - the MSCI AC Asia ex Japan Index - which posted a 32.1% index for the period.

Net assets stood at £230.97m at period end, up 28.2% from the £180.11m recorded on 30 April.

The trust’s net asset value was 276p, up from 210.7p, while its share price rocketed to 246.5p from 183p.

That resulted in a discount per ordinary share of 10.7%, compared to 13.1% at 30 April, or a discount ex income of 9.5%, compared to 11.7%.

“Over recent years, Asian equity markets have had to contend with declining economic growth in the region,” noted chairman Carol Ferguson.

“This is partly due to weak export demand which is not expected to strengthen to any great extent as long as global growth remains subdued.

“It also reflects the re-orientation of China’s economy away from investment as the primary driver of its GDP growth.”

Ferguson said the board was waiting to see what mix of policies the Trump administration pursues, and hoped that pragmatism will prevail over protectionist policies.

“In China, there is some concern that economic stability has been accompanied by a rise in credit growth.

“It is our view that the economy can manage high debt levels for some years to come as long as this debt continues to be funded by domestic savings.”

Meanwhile, Ferguson said India still offers some real growth prospects, despite the fact that a recovery in its GDP growth has been slow to materialise.

“The Modi government is making progress by implementing measures to tackle barriers that have inhibited India’s natural growth drivers.

“As is typical with India, the market can at times be negatively impacted by reforms in the short term, and this can provide opportunities to increase exposure at more attractive valuation levels.”

Against that backdrop, Ferguson said the earnings environment seemed to be gradually bottoming out.

“Asian equity markets are trading at mid-range valuation levels and this is probably fair given we expect high single-digit earnings growth for 2017.

“As such your portfolio manager and the board believe that this is a region where it is possible to make money through judicious stock selection.”

Ferguson added there were still plenty of stocks with attractive growth prospects, whose valuation multiples are offering good entry points for long term investors.