The Company NAV rose 12.0% over the 3rd quarter, whilst the MSCI AC Asia Pacific ex Japan Index (£) rose 12.2%, the FTSE Environmental opportunities Asia Pacific ex Japan Index (EOAX) (£) rose 15.8% and the FTSE Environmental Opportunities Japan Index (EOJP) (£) rose 1.6%. The cash level at the end of September was 2%.
Over the quarter, the drivers of the environmental markets in Asia Pacific continued to develop well. There is a broad range of investment opportunities across both the region and the sub-sectors, as investment increases to reduce oil dependency, provide energy security, ensure water availability and mitigate inflationary infrastructure bottlenecks. In addition, we believe that the valuation of the existing portfolio is attractive.
Rhetoric was raised by leaders in Europe, US and China on the role of cleantech as a driver for job creation, although recent climate meetings in Bonn and Tianjin have not brought the international community closer to a binding climate treaty ahead of the Cancun meeting in December. The US political deadlock has prevented any federal climate or energy legislation. Asian environmental policy has been positive, with more colour on the 12th 5-year plan in China. Taiwan and Malaysia announced ambitious new renewables targets and India is due to start a renewables trading programme in October. Korea aims to build 1 million electric vehicles by 2020. In the water sector Abu Dhabi plans to stockpile vital supplies of water underground, an investment of Dh1.6 billion.
In Alternative Energy & Energy Efficiency, solar power equipment companies Renesola and Trina Solar (China) surged over the quarter as demand beat expectations, strong Q2 numbers were announced and a reversal in the Euro restored their competitive advantage. OCI (diversified environmental, South Korea) rose on the back of strong Q2 numbers, long term contract agreements and firm spot polysilicon prices. Zhuzhou CSR (transport energy efficiency, China) rose as results beat expectations and an announcement was made of a new licensing agreement with Invensys Rail. Delta Electronics (industrial energy efficiency, Taiwan) benefitted from the drive for energy efficiency, industrial automation and capex spending in LED, power electronics and the solar sectors. The strong yen hurt the prospects for exporters and impacted on V Technology (industrial energy efficiency, Japan), whilst SEMCO (industrial energy efficiency, South Korea) weakened due to profit taking after a period of strong performance and concerns over LED price declines in 2H 2010.
In Water Treatment & Pollution Control, Thai Tap (water utilities, Thailand) posted strong 1H results as sales beat expectations and prices rose, in addition to a capacity expansion. ENN Energy Holdings (formally Xinao Gas -pollution control solutions, China) rose on the back of 1H earnings and the announcement of new projects in China and overseas. Japanese exporters Shimadzu and Horiba (both environmental testing & gas sensing), and Torishima Pump (water infrastructure) all suffered from the strength of the yen.
In Waste Technologies & Resource Management, Xinyi Glass (diversified environmental, China) rose on strong 1H results, a share buy-back, strong demand, a new outsourcing deal and the favorable resolution of their court case with Saint Gobain. The positive demand implications of the Chinese Government's focus on the roll out of affordable housing also drove performance. TPI (diversified waste management, Australia) rallied on improving outlook for economic growth and cheap valuations. Daiseki (hazardous waste, Japan) lost ground as its subsidiaries reported weaker than expected results and its consumer base suffered from the strong yen.