Invesco Asia Trust plc Interim Management Statement for the Three Months ended 31 January 2014 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 MSCI All Countries Asia Pacific ex-Japan Index (total return), measured in sterling. Material Events No material events occurred in the period. Dividends No dividends were declared during the period. Managers'review, outlook and strategy Asian equity markets have fallen over the period as investor risk aversion has increased due to several different factors, including renewed concerns over the prospect of tighter global liquidity conditions as the US Federal Reserve (Fed) confirmed that it would start to taper its asset purchase programme. Meanwhile, optimism surrounding China's new reform agenda has been reversed by some weaker-than-expected economic data and negative news flow surrounding a Chinese trust fund. Asian economic growth has slowed, but we expect it to remain stable and be sufficiently high in 2014 to offer attractive investment opportunities. Inflationary pressures are less of a concern, except in India and Indonesia, where monetary policy has had to be tightened. Although the region continues to face a number of challenges that require structural reform, we believe markets have to a large extent taken this into account given their current low valuation levels relative to history and against developed markets. Consensus earnings growth forecasts for Asia Pacific ex Japan are currently around 10.3% for 2014, bringing valuation levels for the region to 11.7 times 2014 expected earnings. These valuation levels remain supportive of Asia Pacific ex Japan equity markets in our view. The new reform agenda in China provides us with grounds for optimism in the medium-term; particularly the policies and initiatives that are focused on allowing market forces a more decisive role in the allocation of resources, improving capital allocation and shifting income towards households. There have also been signs of positive change elsewhere in Asia, for example in India, where the gradual emergence of a more progressive reform agenda is likely to be the focus of this year's general election. While we acknowledge that with change comes uncertainty, as long term investors we believe that these forces for change could potentially drive Asia's next leg of sustainable growth. We believe the investment trust remains well-balanced, with exposure to a variety of businesses that possess strong competitive advantages and undervalued earnings growth prospects. The investment trust remains well diversified geographically, with our largest overweight position relative to the benchmark index being in Hong Kong and China. We continue to favour consumer-related areas of this market, but have recently added exposure in more economically sensitive areas trading at particularly undemanding valuation levels, in our view. We remain underweight in Australia and its banks, preferring to hold what we consider to be good quality banks that appear well placed to grow their loan books profitably in countries where credit penetration is low. However, given recent weakness in the Australian dollar we have become more constructive on the Australian equity market, and would expect to gradually reduce the portfolio's underweight position as and when we find stock specific opportunities. Our exposure in the techology sector remains significant and includes industry leaders as well as Chinese internet companies that are fundamentally undervalued in our opinion, despite consistently generating strong free cash flow. Asian equity markets should continue to enjoy the support of structural trends that can be expected to remain intact over the medium-term, such as rising incomes and robust domestic consumption. While Asian markets have underperformed global markets over the last couple of years, valuations have to a large extent discounted the negative news, and are below average levels. While this is a challenging macroeconomic environment for investors, we believe we can continue to find attractive investment opportunities in our universe. Performance- Total Return 3 Months 1 Year 3 Years 5 Years Share Price -8.2% -5.3% -0.2% 104.2% Net Asset Value -7.8% -4.9% 4.8% 114.4% MSCI (All Countries) Asia -9.3% -7.5% 0.8% 99.3% Pacific ex-Japan Index (Sterling Adjusted) Source: Thomson Reuters Datastream All figures expressed in sterling terms Share Price and Discount As at For the Three Months Ended 31-Jan-14 31-Jan-14 High Low Average Ordinary shares mid-market 151.50 166.50 151.40 160.00 price (pence) Net Asset Value per share: - cum income (pence) 172.63 - ex income (pence) 169.43 Discount per ordinary share to NAV: - cum income 12.2% - ex income 10.6% Discount (ex income) 9.85% average for 9 months to date Source: Thomson Reuters Datastream Assets and Gearing 31-Jan-14 Total Assets less Current Liabilities excl. Borrowings (£m) 162.3 of which cash (£m) 0.6 Overdraft (£m) - Borrowings (£m) 8.7 Total Shareholders' Funds (£m) 153.6 Cum Income Net Asset Value - 172.6 (pence per share) Gross Gearing 5.7% Net Gearing 5.3% Gross Gearing This reflects the amount of gross borrowings in use by the company and takes no account of any cash balances. It is based on gross borrowings as a percentage of shareholders' funds. Net Gearing This reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents. It is based on net borrowings as a percentage of shareholders' funds. Geographical Breakdown of Portfolio 31-Jan -14 South Korea 22.7% China 21.5% Hong Kong 14.9% Taiwan 10.7% India 9.6% Australia 8.5% United Kingdom 4.0% Philippines 2.6% Singapore 2.5% Indonesia 1.7% Thailand 1.3% Top 10 Holdings Investments Country % of Portfolio 1 Samsung Electronics South Korea 6.0% 2 UPL India 3.7% 3 Hutchison Whampoa Hong Kong 3.7% 4 Baidu - ADR China 3.5% 5 Taiwan Semiconductor Manufacturing Taiwan 3.2% 6 NetEase - ADR China 3.1% 7 Hyundai Motor - Preference Shares South Korea 3.0% 8 Industrial and Commercial Bank of China China 2.7% 9 Korea Electric Power Corporation South Korea 2.7% 10 HSBC United Kingdom 2.5% Changes to Share Capital Ordinary Shares of 10p each Issued Treasury As at 31-Oct-13 89,384,677 3,277,224 Ordinary shares bought back (388,354) 0 Ordinary shares issued 0 0 As at 31-Jan-14 88,996,323 3,277,224 Since 31 January 2014, 50,000 ordinary shares were bought back and cancelled on 3 February 2014. There have been no further issues or buybacks of shares undertaken since 31 January 2014. The Company has authority to buy back shares for cancellation or placing into treasury and to issue new shares (disapplying pre-emption rights), in each case within specified limits. The Company expects to renew these authorities each year. 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 March and August each year. For and on behalf of Invesco Asset Management Limited 11 March 2014 Ordinary Shares - Listing Category: Premium - Equity Closed-ended Investment Funds Registered Office: Administrative Office: Perpetual Park 30 Finsbury Square Perpetual Park Drive London Henley-on-Thames EC2A 1AG Oxfordshire Tel: 020 7065 4000 RG9 1HH Registered in England No 3011768 An investment company under Section 833 of the Companies Act 2006 END
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INVESCO ASIA TRUST PLC: Interim Management Statement
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