Interim Management Statement
Invesco Asia Trust plc
Interim Management Statement
for the Three Months ended 31 July 2010
Objective of the Company
Invesco Asia Trust plc (`the Company') is a UK investment trust listed on the
London Stock Exchange. The Company was launched in July 1995.
The objective of Invesco Asia Trust plc is to provide long-term capital growth
by investing in a diversified portfolio of Asian and Australasian companies.
The Company aims to achieve growth in its net asset value in excess of the
Benchmark Index, the Morgan Stanley Capital International All Countries Asia
Pacific ex-Japan Index (total return), measured in sterling.
Material Events
Shareholders are given the opportunity to vote on the future of the Company
every three years and, at the Annual General Meeting held on 5 August 2010, an
ordinary resolution was passed releasing Directors from their obligation to
convene an Extraordinary General Meeting in 2011 proposing a special resolution
that the Company be wound up on a voluntary basis.
In the Board's ongoing discussions with shareholders in advance of the
continuation vote, it became clear that one of the Company's larger
shareholders wished the Board to consider, in the year of the continuation
vote, a tender offer to provide a return of capital to shareholders at close to
NAV as a means of discount control. After careful consideration, the Board has
decided that it would be in the interests of shareholders as a whole to propose
a tender offer at the end of the current financial year (subject to receiving
necessary shareholder approval) for up to 15% of the Company's issued share
capital, at a 2% discount to NAV less the costs of the tender, if the Company's
shares have traded over the year to 30 April 2011 at an average discount of
more than 10% to NAV (fully diluted, ex income).
After the conclusion of the Annual General Meeting on 5 August 2010, Robin
Baillie retired as a Director of the Company, having been on the Board since
April 1995.
Dividends
At the Annual General Meeting on 5 August 2010, shareholders approved the
payment of a final dividend of 2.25p per ordinary share on 13 August 2010 to
shareholders on the Register on 16 July 2010.
Manager's Report
Asian equity markets returned mixed performances in the period, against a
background of rising concerns about the sustainability of the global economic
recovery. These issues contrasted with largely positive corporate earnings,
resulting in further market volatility.
Slowing growth in China and signs that the global recovery may be moderating
have weighed upon Asian markets. While China's rate of expansion is slowing, it
is doing so from a peak of almost 12% year-on-year growth and we expect GDP
growth for the year as a whole to be robust. Rising domestic consumption and
continued recovery in exports from a lower base should keep the economy firmly
on a growth footing in our view. With the outlook for growth globally becoming
less clear, Asian authorities are likely to slow the pace of policy
normalisation, leaving accommodative policies in place for longer than had
previously been expected. We believe that Asia's better economic and corporate
fundamentals relative to the rest of the world can protect its markets on the
downside. Over the longer term, we see Asia's correlation with western markets
reducing as the relative importance of exports declines and domestically
generated demand increases. As a result, we remain positive about the long term
prospects for both Asian economies and equity markets.
Currently, we have significant positions in the insurance sector, where we
believe the vast potential of a relatively untapped Chinese market is not
reflected in valuations. The real estate sector is also well represented within
the portfolio. In our view, this sector is not only attractively valued, but is
also supported by the structural shift towards cities, high savings rates and
generally reasonable levels of affordability. With healthy wage growth and low
levels of debt, consumer goods companies are also seeing strong top line
growth. At the current time, we believe that some companies within the
household and personal products and the consumer durables sectors are at
valuation levels that underestimate their sustainable growth potential. We
maintain a cautious outlook for telecom groups, which are generally fully
valued and have limited growth prospects in what is a highly competitive
environment. We also have an underweight position in energy and material
companies, which we believe have already priced-in economic recovery, leaving
little potential upside. Geographically, we have significant exposure to Hong
Kong and China in companies that can benefit from strong and sustainable
economic growth in China.
Performance
3 Months 1 Year 3 Years 5 Years
Total Return
Share Price -2.0% +18.6% +30.1% +99.8%
Net Asset Value (Diluted) -2.2% +19.9% +26.3% +98.0%
MSCI (All Countries) Asia -5.5% +22.9% +20.7% +87.5%
Pacific ex Japan Index
(Sterling Adjusted)
Capital Return
Net Asset Value (Diluted) -3.7% +18.2% +21.1% +85.4%
Source: Thomson Datastream
Share Price and Discountto Net Asset Value
As at For the Three Months Ended
31 July 2010 31 July 2010
High Low Average
Ordinary shares mid-market 133.25 139.0 126.8 132.9
price (pence)
Net Asset Value (diluted)
per
Share:
- cum income (pence) 148.3
- ex income (pence) 147.0
Discount per ordinary
share
on diluted NAV:
- cum income -10.1%
- ex income -9.4%
Source: Thomson Datastream
Assets and Gearing
31 July 2010 30 April Change
2010
Total Assets less Current £146.5m £155.9m -6.0%
Liabilities excl. borrowings
of which cash £0.9m £1.2m
Borrowings £3.0m £5.0m
Total Shareholders' Funds £143.5m £150.9m -4.9%
Gearing 102 103
Diluted Net Asset Value
The diluted net asset value is the net asset value per share that would arise
if the subscription shares were converted at 125p. It is calculated by dividing
the net asset value, by the number of shares that would be in issue if all the
subscription shares were converted to ordinary shares. Where the diluted net
asset value per ordinary share is greater than the basic net asset value per
ordinary share, there is no dilutive effect.
Gearing
The term applied to the effect of borrowings and prior charge share capital on
assets that will increase the return on investment when the value of the
Company's investments is rising but reduce the return when values are
declining. A figure of 100 or 0% indicates there is no gearing.
GeographicalBreakdown of Portfolio
31 July 2010 30 April 2010
Hong Kong 25.4% 25.2%
South Korea 16.7% 17.1%
China 13.5% 12.5%
Taiwan 11.2% 11.8%
India 8.1% 7.8%
Australia 7.8% 9.6%
UK 5.1% 4.9%
Singapore 3.3% 2.7%
Philippines 3.3% 3.0%
Indonesia 2.8% 3.0%
Malaysia 2.1% 1.8%
Thailand 0.7% 0.6%
Top 10 Holdings
Ranking Investments Market of % of Ranking at
Now Listing Portfolio 30 April
2010
1 Samsung Electronics South Korea 5.2% 1
2 Jardine Matheson Hong Kong 4.8% 2
3 China Taiping Insurance Hong Kong 2.9% 3
R
4 West China Cement United Kingdom 2.8% 5
5 Taiwan Semiconductor Taiwan 2.7% 4
Manufacturing
6 United Phosphorus India 2.3% 7
7 Hutchison Whampoa Hong Kong 2.3% 6
8 Industrial & Commercial China 2.1% 17
Bank of China H
9 Wharf Hong Kong 2.0% 8
10 Daegu Bank South Korea 1.9% 16
All ordinary shares unless otherwise stated
R= Red Chip Holdings
H= H shares
Maximum Exposure Limits
The maximum holding in a single investment in a company or combined exposure to
group-related companies is limited to 10% and 15% respectively of the Fund's
total assets at the time of the investment, unless otherwise authorised by the
Board.
Changes to Share Capital
There were no changes to the Company's ordinary share capital during the
period. As at 31 July 2010 the Company's issued share capital consisted of
93,837,425 ordinary shares of 10p each and 18,767,485 Subscription Shares of 1p
each. No shares were held in Treasury.
The Company has authority to buy back ordinary shares (for cancellation or into
Treasury) up to a maximum number of 14,066,230 or 14.99% of ordinary shares in
issue and subscription shares (for cancellation) up to a maximum number of
2,813,246 or 14.99% of subscription shares in issue.
The Company has the authority to allot relevant securities of the Company up to
an aggregate nominal amount of £938,374 and to allot relevant securities of the
Company, disapplying pre-emption rights for up to an aggregate nominal amount
of £469,187.
Price and Performance
The Company's Ordinary shares are listed on the London Stock Exchange and the
price is published in the Financial Times under `Investment Companies' and in
the Daily Telegraph under `Investment Trusts'.
The Company's net asset value is calculated on a daily basis and can be viewed
on the London Stock Exchange website at www.londonstockexchange.com.
Further information can be obtained from Invesco Perpetual as follows:
Free Investor Helpline: 0800 085 8677
Internet address: www.invescoperpetual.co.uk/investmenttrusts
The information provided in this statement should not be considered as a
financial promotion or recommendation.
Interim management statements are expected to be published in February and
August each year.
For and on behalf of
Invesco Asset Management Limited
3 September 2010
Ordinary Shares - Listing Category: Premium - Equity Closed-ended Investment Funds
Subscription Shares - Listing Category: Standard - Shares
Registered Office
30 Finsbury Square, London, EC2A 1AG
Telephone: 020 7065 4000
Facsimile: 020 7065 3166
Registered in England No 3011768
An Investment Company under Section 833
of the Companies Act 2006
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