Invesco Asia Trust Plc
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LEI: 549300YM9USHRKIET173
Invesco Asia Trust plc
HEADLINE: Purchase of Own Securities
Invesco Asia Trust plc announces that on 27 January 2025, it repurchased 25,000 ordinary shares of 10p each (`ordinary shares') at a price of 337.00p per share, to be held as Treasury Shares.
The total number of ordinary shares held in Treasury following this repurchase is 10,418,594.
The total number of ordinary shares remaining in issue (excluding 10,418,594 ordinary shares held in treasury) is 64,581,287.
For further information, please contact:
Naomi Rogers
For and on behalf of Invesco Asset Management Limited
Corporate Secretary to Invesco Asia Trust plc
Email: investmenttrusts@invesco.com
Will Ellis
Head of Specialist Funds - Invesco
Email: will.ellis@invesco.com
27 January 2025
LEI: 549300YM9USHRKIET173
Invesco Asia Trust plc
HEADLINE: Purchase of Own Securities
Invesco Asia Trust plc announces that on 22 January 2025, it repurchased 25,000 ordinary shares of 10p each (`ordinary shares') at a price of 340.00p per share, to be held as Treasury Shares.
The total number of ordinary shares held in Treasury following this repurchase is 10,393,594.
The total number of ordinary shares remaining in issue (excluding 10,393,594 ordinary shares held in treasury) is 64,606,287.
For further information, please contact:
Naomi Rogers
For and on behalf of Invesco Asset Management Limited
Corporate Secretary to Invesco Asia Trust plc
Email: investmenttrusts@invesco.com
Will Ellis
Head of Specialist Funds - Invesco
Email: will.ellis@invesco.com
22 January 2025
LEGAL ENTITY IDENTIFIER: 549300YM9USHRKIET173
INVESCO ASIA TRUST PLC
Half-Yearly Financial Report for the Six Months to 31 October 2024
The following text is extracted from the Half-Yearly Financial Report for the Six Months to 31 October 2024. All page numbers below refer to the Half-Yearly Financial Report which will be made available on the Company's website.
Investment Objective
The Company's objective is to provide long-term capital growth and income by investing in a diversified portfolio of Asian and Australasian companies. The Company aims to achieve growth in its net asset value (`NAV') total return in excess of the Benchmark Index, the MSCI AC Asia ex Japan Index (total return, net of withholding tax, in sterling terms).
Financial Information and Performance Statistics
The benchmark index of the Company is the MSCI AC Asia ex Japan Index (total return, net of withholding tax, in sterling terms)
Six Months to
31 October
2024
Year ended
30 April
2024
Total Return Statistics(1) (dividends reinvested)
Net asset value (`NAV') total return(2)
6.3%
2.7%
Share price total return(2)
9.6%
2.2%
Benchmark index total return(3)
8.6%
7.9%
Capital Statistics
At
31 October
2024
At
30 April
2024
change %
Net assets (£'000)
249,277
238,266
4.6
NAV per share
384.15p
361.51p
6.3
Share price(1)
343.00p
313.00p
9.6
Benchmark index (capital)
1,059.47
989.35
7.1
Discount(2) per ordinary share
(10.7)%
(13.4)%
Average discount over the six months/year(1)(2)
(12.4)%
(11.3)%
Gearing(2):
- gross
2.3%
5.3%
- net
2.1%
4.5%
(1) Source: LSEG Data & Analytics.
(2) Alternative Performance Measures (`APM'), see pages 18 to 20 for the explanation and reconciliations of APMs. Further details are provided in the Glossary of Terms and Alternative Performance Measures in the Company's 2024 Annual Financial Report.
(3) Index returns are shown on a total return basis, with dividends reinvested net of withholding taxes.
Chairman's Statement
Highlights:
· Performance is behind the index benchmark over six months but well ahead over three and five years.
· The announced combination of the Company with Asia Dragon Trust plc (`Asia Dragon') is progressing smoothly and expected to complete on 14 February 2025.
· It is going to be an exciting period for Asian markets and especially for us as we look forward to welcoming Asia Dragon shareholders.
Update on Combination with Asia Dragon Trust
The announced combination of the Company with Asia Dragon Trust plc (`Asia Dragon') is progressing smoothly. The Company published a prospectus on 18 December 2024 for the issue of new shares to Asia Dragon shareholders. The Company held its General Meeting to approve the combination on 16 January 2025. Asia Dragon has two General Meetings scheduled for 4 and 13 February 2025, following which the combination should complete on 14 February 2025. Our Prospectus carries full details of the proposals, which include new measures to enhance our Corporate Proposition: replacing the 25% performance conditional tender and three-yearly continuation vote with a three-yearly 100% unconditional tender; enhancing the dividend policy to pay out 1% of NAV quarterly and, a generational reduction in the management fee and ongoing charges ratio to a blended rate of 0.57% and a forecast of approximately 0.70% respectively, these calculations exclude the benefit of Invesco's contribution to the costs of the combination (see page 37 of the prospectus for full details). The merged Company will be called Invesco Asia Dragon Trust plc and will continue to be managed by Fiona Yang and Ian Hargreaves at Invesco in the same way as this Company has been.
This combination is transformational for the Company and both sets of shareholders. For our shareholders, apart from the lower fees and charges and greater liquidity, it brings the scale to add to our existing buy ratings that will spur future growth in demand for the Company's shares. For Asia Dragon's shareholders, it gives continuity of mandate with a strong investment house, proven and experienced managers, a repeatable investment process and a successful long-term performance record. Our proposed discount management policy is bold and provides the opportunity for us to break free from the persistent double-digit discounts and locked registers from which so many Asian and Emerging Markets trusts have suffered. Our aim is to make this the go-to Asian trust, trading on a premium rating, growing organically and also through further combinations.
Review of the six months to 31 October 2024
Over the six months to 31 October 2024 NAV total return of +6.3% was behind our benchmark (MSCI AC Asia ex Japan Index) total return of +8.6%. The share price total return was +9.6% with the discount narrowing from 13.4% to 10.7% over the period. Attribution analysis shows that the underweight position in Chinese financials, which performed strongly towards the end of the period, was the main contributor to underperformance.
A half-yearly dividend of 7.80p was paid on 29 November 2024 representing 2% of NAV. This was in accordance with our previous policy of paying two dividends per year amounting to 4% of NAV. A further dividend of 3.90p will be paid on 31 January 2025 as we move to paying out 1% of NAV as a dividend every quarter. A final dividend, also 1%, will be paid to all shareholders in April 2025, after the combination completion date.
In August 2020 the Board undertook to effect a tender offer for up to 25% of the Company's issued share capital at a discount of 2% to the prevailing NAV per share (after deduction of tender costs) in the event that the Company's NAV cum-income total return performance over the five year period to 30 April 2025 fails to exceed the Company's comparator index, the MSCI AC Asia ex Japan Index (net of withholding tax, total return in sterling terms) by 0.5% per annum over the five years on a cumulative basis.
We have now completed four and a half years of the five-year assessment period: As at 31 October 2024, the Company's NAV was up by 61.2% over the four and a half years while the index was up by 29.3%. On an annualised basis, NAV was up by 11.2% p.a. while the index was up by 5.9% p.a.
Cumulative Total Return (dividends reinvested) to 31 October 2024(1)
One
Three
Five
Ten
Year
Years
Years
Years
Net asset value (`NAV')
16.0%
9.1%
50.2%
139.0%
Share price
21.4%
7.2%
55.9%
147.7%
Benchmark index(2)
20.8%
2.2%
26.1%
90.2%
(1) Source: LSEG Data & Analytics.
(2) The benchmark index of the Company was changed on 1 May 2015 to the MSCI AC Asia ex Japan Index from the MSCI AC Asia Pacific ex Japan Index (both indices total return, net of withholding tax, in sterling terms).
The Investment Case and the Corporate Proposition
Shareholders will be aware that we believe that the discount is determined by a combination of demand for Asian equity investment vehicles, the Investment Case for the Company and the Corporate Proposition that we offer. In order to stimulate more demand for the Company's shares, we aim to simultaneously provide a strong investment case and a strong corporate proposition.
The Investment Case rests on accessing the attractions of Asian equity markets through the institutional expertise of Fiona Yang and Ian Hargreaves' team at Invesco. The Co-Portfolio Managers' investment process can be summarised as `valuation not value' and has been very successful in attracting institutional investors such as pension funds and sovereign wealth investors. In times like these of great change, we would argue that this forward-looking active approach (as opposed to a backward-looking index or passive style) is exactly what is needed. The Company is the only way for individual investors to access Fiona and Ian's expertise.
The Company's Corporate Proposition was first introduced in 2018. Since then the Board has continued to review and adopt measures intended to create additional demand for the Company's shares, both from existing and new shareholders, and to reduce the discount. We have been careful to ensure that the measures chosen are in the best interests of all shareholders. The intention is that these gains will combine to make the corporate proposition as compelling as the investment case.
The multiple elements to our Corporate Proposition are detailed in the 2024 Annual Financial Report's Chairman's Statement and include, as well as the measures outlined above, an enhanced dividend policy, a strong integrated ESG approach, engaging more individual shareholders, the ability for shareholders to meet both the Co-Portfolio Managers and the Directors, close management of ongoing charges and fees, the active use of gearing, the `skin in the game' of Directors' and Managers' shareholdings and the authority to buy back shares.
The average discount over the six months to 31 October 2024 has been 12.4%, which is above our 10% tolerance. Discounts across the investment trust industry have widened over the last two years and remain elevated. Our buybacks have accelerated, and for the six months to 31 October 2024, a total of 1,017,000 shares were bought back into Treasury at a total cost of £3,304,000, representing 1.5% of the starting number of shares in issue (excluding treasury shares), which has been accretive to NAV by 0.15%.
Update
From 31 October 2024 to 20 January 2025, the NAV total return has been 1.9%, outperforming the index return of 1.2%. The share price total return has been 3.4%, with the discount narrowing to 9.7%. The discount has narrowed since the announcement of the combination with Asia Dragon. The last buyback was on 21 January 2025.
Outlook
In previous Chairman's Statements I lamented that not much had changed. Now everything seems to be changing. The new Trump administration seems intent on pursuing a protectionist trade policy with high tariffs, the deterrent or punishment (depending on your point of view) for actions deemed unfair trade practices. Loosening US fiscal policy through tax cuts will tend to put upward pressure on US interest rates although the ultimate effect on the US dollar will depend upon how much US government spending can be controlled. The effects on Asia are not necessarily negative but the outcome is less predictable and the tail risks are higher.
Meanwhile within Asia, China continues to wrestle with its problem of excess property supply and bad debts within the housing and banking sectors. The Chinese government's long game of prioritising domestic social stability will be tested again if it has to replace lower export growth with stronger domestic growth. But the economic resources are available to force that switch if necessary and there has been a series of government announcements aimed at boosting the property market to jump start economic growth.
India is at an interesting juncture following a long bull market, which has seen the stock market gain 94% over the last five years. With the market now trading on a 23x historic price to earnings multiple, it looks expensive and it is concerning that many domestic investors are untested in a bear market. Yet there is also the opportunity for India to be one of the biggest beneficiaries of a US pivot of trade away from China and Europe.
Elsewhere the challenge is to what extent those Asian companies with high levels of US sales can navigate Trump's new tariff regime. Increasing production in the US or reducing production within China will help. At the macroeconomic level, prioritising domestic growth over exports would also help. However, these changes will take time to offset the immediate dislocations from tariffs.
Change is inevitable and outcomes are uncertain. Many have already defaulted to a pessimistic scenario or are waiting on the sidelines but there is a significant probability of a positive outcome. Even a muddling-through outcome could produce positive returns, especially given the relatively low starting valuations for many of Asia's stockmarkets. It is a fantastic opportunity for active investors and stockpickers.
It is going to be an exciting period for the markets and even more so for us as we look forward to welcoming Asia Dragon shareholders.
Neil Rogan
Chairman
21 January 2025
Portfolio Managers' Report
Q How has the Company performed in the period under review?
A The Company's net asset value grew by 6.3% (total return, in sterling terms) over the six months to 31 October 2024, which compares to the benchmark MSCI AC Asia ex Japan index return of 8.6%.
Asian equity markets performed well over the period, benefitting from: the start of a global rate easing cycle, reasonable starting valuations and robust corporate earnings. China has also accelerated its policy easing to try and help stabilise asset prices and support its faltering economy, with the portfolio's Chinese holdings making a strong contribution to overall performance.
However, market volatility has also been a feature, with bifurcated performance between different countries and sectors. Taiwan's equity market was propelled to record highs by its tech sector, which has benefitted from strong AI-related demand, and the portfolio benefitted from the positive impact of our stock selection in this market. However, at the other end of the scale (see chart in the report) South Korea has underperformed, reflecting a waning of enthusiasm for the `Corporate Value-Up' theme, and the weak performance of its tech giant Samsung Electronics, one of the portfolio's largest holdings.
India's expensive equity market has delivered lacklustre returns, and the portfolio's underweight position has started to contribute positively to relative performance. Meanwhile, Association of Southeast Asian Nations (`ASEAN') market performance has been mixed with strength in Singapore and Thailand not matched by returns from Indonesia, where growth has slowed amidst a period of uncertainty created by the long transition period between the election and inauguration of the new President.
Our approach continues to be guided by valuations, with a focus on stock picking, balance sheet strength, and maintaining a well-diversified portfolio, rather trying to lean too heavily on a specific macro scenario occurring. There continues to be significant valuation disparity across Asian markets, and genuine progress in policies designed to improve shareholder returns is providing fertile ground for active stock pickers.
Q What have been the biggest contributors to relative performance?
A Kasikornbank was the biggest single contributor, with a re-rating in the Thai bank's share price reflecting improvements in asset quality and government measures to boost consumption, such as a cash handout programme. Given the bank is very well capitalised with a slow loan growth outlook, there is also the prospect of higher dividends. Elsewhere, Singapore-listed Sea was another notable performer, with market share gains for its ASEAN e-commerce business suggesting a more rational competitive landscape. Stock selection in India also added value, with notable contributions from Shriram Transport Finance and HDFC Bank, supported by solid earnings results.
The remarkable September 2024 rally in Hong Kong and China markets stalled in October, with some disappointment over a lack of detail on stimulus measures, specifically those expected to support consumption and property prices. However, the likes of Sands China, JD.com, Tencent and noodle and beverage manufacturer Tingyi all delivered positively over the period, benefitting from improving fundamentals as well as a reduction in the market risk premium for Chinese stocks.
Q
LEI: 549300YM9USHRKIET173
Invesco Asia Trust plc
HEADLINE: Purchase of Own Securities
Invesco Asia Trust plc announces that on 21 January 2025, it repurchased 50,000 ordinary shares of 10p each (`ordinary shares') at a price of 343.00p per share, to be held as Treasury Shares.
The total number of ordinary shares held in Treasury following this repurchase is 10,368,594.
The total number of ordinary shares remaining in issue (excluding 10,368,594 ordinary shares held in treasury) is 64,631,287.
For further information, please contact:
Naomi Rogers
For and on behalf of Invesco Asset Management Limited
Corporate Secretary to Invesco Asia Trust plc
Email: investmenttrusts@invesco.com
Will Ellis
Head of Specialist Funds - Invesco
Email: will.ellis@invesco.com
21 January 2025
P R O D U C T S U G G E S T I O N S
