Interim Management Statement

RNS Number : 2951D

Pacific Assets Trust PLC

30 November 2009

 



Pacific Assets Trust plc

Interim Management Statement

For the Three Month Period from 1 August 2009 to 31 October 2009

Investment Objective

Pacific Assets Trust plc aims to achieve long term capital growth through investment in selected companies in the Asia Pacific region and the Indian sub-continent, but excluding Japan and Australasia.

Performance Summary

Capital Return	As at  31 October 2009	As at  31 July  2009	Movement
Net asset value (000s)	£129,590	£122,212	6.0%
Net asset value per share	109.50p	103.26p	6.0%
MSCI All Country Far East ex Japan Index	256.52	245.00	4.7%
Share price (mid market)	100.00	97.00p	3.1%
Discount	8.7%	6.1%
Gearing‡	(0.4)%	(0.9)%
Total Return#			For the three month period to 31 October 2009
Net asset value			6.0%
MSCI All Country Far East ex Japan Index			5.3%
Share price			3.1%

Sources: F&C Investment Business Limited, Datastream.

‡ - Gearing: equity investments/shareholders' funds

# - All total returns are based on net dividends re-invested

Review for the Period

The Company's net asset value total return for the three month period ended 31 October 2009 was 6.0 per cent. For comparison purposes, the total return from the MSCI All Country Far East ex Japan Index was 5.3 per cent.

Asset allocation and stock selection were positive contributors to performance against the regional index with stock selection in Korea, Indonesia and Hong Kong more than off setting the underperformance from the Company's Chinese holdings. 

Country weightings were little changed over the period with turnover in general being light. However, profits were taken in positions where the Managers felt share prices had over-extended themselves or where further upside could no longer be identified. Due to concerns that market valuations appeared full and expectations were becoming elevated the Company remained ungeared over the period, holding a modest cash position. 

The trend of macroeconomic recovery in the developed world continued to unfold over the three months to the end of October.  France, Germany and the US emerged out of technical recession, the decline in US unemployment began to moderate, and the new political leadership in Japan brought hopes that their economy might at last soon see some signs of life once more.  This led to renewed interest in the developed markets at the marginal expense of parts of the emerging world, including Asia, as the MSCI AC World Index rose 8.4 per cent. 

The principal source of relative underperformance for the region came from China in the late summer, as comments from the PBOC about potential exit strategies raised concerns that growth momentum might wane resulting in a slowdown in earnings forecasts, which had only recently started to rise.  The State Council was quick in its attempt to reassure markets by reaffirming the need to maintain an appropriately loose monetary policy and supportive fiscal policy in order to achieve high and steady GDP growth.  However, investors used the confusion as an excuse to take profits. 

Two of the better performing markets over the three months were Vietnam and Thailand rising 27.9 per cent and 8.7 per cent respectively (in sterling terms).  Excess domestic liquidity in both countries were the key drivers to the markets, which then combined with increased foreign participation in late September and early October.  Malaysia and Korea also outperformed the region, rising 9.7 per cent and 6.9 per cent respectively (in sterling terms).  

Other than China two of the markets which performed less well were Singapore and Hong Kong, rising 3.1 per cent and 4.0 per cent respectively (in sterling terms).  Having achieved good performance for the year to date these markets experienced a period of relative neglect. Additionally, Hong Kong suffered from its China proxy status.   

With the region now trading above historical average valuations and investor and analyst expectations now appearing elevated, the risk of disappointment has increased.  A lack of top line growth due to the easing of government stimulus measures may trigger a correction now that the liquidity-led lift off phase appears to be nearing an end.  Furthermore, as markets contend with the prospect of exit strategies by global central banks, easing risk spreads are unlikely to sustain their recent downward trends challenging the lofty level of investor risk appetite.  Consequently, Asia's relatively higher beta status and formidable returns year to date may lead to short term profit taking.  However, over the medium term the structural growth story inherent across Asia remains compelling and with a banking system that is relatively robust the prospects for high sustainable GDP growth are good.

Top Ten Holdings 

Company	Country	31/10/09 Percentage of total assets
Hon Hai Precision	Taiwan	4.4
Perusahaan Gas Negara	Indonesia	4.1
Kasikornbank	Thailand	3.7
Shinhan Financial	South Korea	3.7
NHN Corporation	South Korea	3.2
Advanced Semiconductor	Taiwan	3.0
Bank of China	China	3.0
DBS Group	Singapore	2.9
China Mobile	China	2.9
Sun Hung Kai Properties	Hong Kong	2.9
Total		33.8

Geographical Analysis 

Country	31/10/09 Percentage of total assets		31/7/09 Percentage of total assets
South Korea	20.0		20.8
Hong Kong	19.4		16.5
China	18.6		21.4
Taiwan	15.5		15.5
Indonesia	8.9		8.4
India	5.5		5.1
Thailand	5.0		4.8
Singapore	5.0		5.0
Malaysia	1.7		1.6
Liquidity	0.4		0.9
Total	100.0		100.0

The Board is not aware of any significant events or transactions which have occurred since 31 October 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Daily and Key Information

This statement and further information regarding the Company, including daily net asset values published since the end of the period and monthly factsheets, can be found at the Company's website www.pacific-assets.co.uk, or at www.fandc.co.uk.

For further information please contact:

Peter Dalgliesh/Gordon Hay Smith

F&C Investment Business Limited

Tel: [phone]

 

END

 

 

IMSBDBDBXDXGGCG