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Aberdeen Asian Smaller Companies Investment Trust PLC

 

Objective

The investment objective of the Company is to maximise total return to Shareholders over the long term from a portfolio of smaller quoted companies (with a market capitalisation of up to approximately US$750m at time of investment) in the economies of Asia and Australasia, excluding Japan.

Manager's Monthly Report

June 2009


Markets & Economic Overview

Asian equities rose sharply in May, buoyed by the seemingly benign results of the US bank stress tests, hopes that India’s Congress Party election victory would speed up economic reform and tentative signs that the global recession may be abating. Notably, small cap equities outperformed the broader market. Inflation in China, India and Singapore eased in April. Central banks in Indonesia, the Philippines and Sri Lanka lowered interest rates but others in the region kept rates steady. First-quarter GDP figures were disappointing: Thailand slid into recession, Taiwan contracted at record pace, but India and Indonesia expanded. Hong Kong will spend HK$16.8 billion to lift its economy. In politics, Indonesian president Yudhoyono’s Democrat Party claimed victory in the parliamentary elections, while Pyongyang drew sharp criticism worldwide for conducting nuclear and missile tests.

Portfolio news

Over the month, we sold AEON Thana after its strong run. We also took advantage of the sharp rise in Hong Kong Catering’s share price to divest our holding, given its poor operating fundamentals. In corporate news, AEON Co. reported better-than-expected first-quarter results despite the tough operating environment.

Strategy and outlook

Looking ahead, the sheer weight of liquidity may help to maintain the recent rally’s momentum, despite the still uncertain outlook for both economic growth and corporate earnings. Any global economic recovery is likely to be drawn out, given the structural problems that persist in the West and China’s inability to compensate quickly enough for the collapse in demand for Asian exports. As such, we expect a pullback at some stage. But we remain positive about Asia’s long-term prospects, because of its better fundamentals with respect to debt levels and latent demand.


Source: Monthly Factsheet Aberdeen Asset Managers Limited