Gabriel Sacks

The firm’s net asset value total returned increased by 43.4% (2020: -5.5%) outperforming the Benchmark total return of 35.7% (2020: -5.2%).

At the same time, the share price increased by 48.3% over this time frame (2020: -8.4%) while the board confirmed a total dividend per ordinary share of 4.3p (2020:4.3p).

During the reporting period, it was seen that there was clear momentum on environmental issues, with more countries committing to climate change goals and lower carbon futures.

Across the region, China, Japan and South Korea set long-term net-zero emission targets, while India and Singapore increased investment in renewable energy and clean-energy vehicles. It is viewed that Asia is well positioned for this trend, which should create opportunities for quality companies across segments, including electric cars, batteries and alternative power generation.

In recognition of these structural changes, the company’s investment managers have been adding several quality stocks to the portfolio that are leaders in these areas.

Another significant change seen at the portfolio level was a transition towards more direct holdings in China and away from the pooled China A Share fund.

Overall, Aberdeen New Dawn has grown more comfortable with investing in the mainland which stems from experience gained through work done by the Aberdeen Standard Investment team in Asia to understand the market, due-diligence and research to assess companies and regular engagement.

With the switch, the company managers are able to invest directly in some of the market’s best-quality companies, sharpening the Company’s Chinese exposure.

Donald Workman, chairman, Aberdeen New Dawn Investment Trust, said: “The past year was one of extraordinary upheaval. The unfolding health crisis caused by Covid-19 led to a terrible loss of life and impacted everyone, upending daily routines, disrupting business activity and economies everywhere.

“Against such a backdrop, the strength of Asia Pacific equity markets was all the more remarkable. Share prices, as measured by the MSCI All Countries Asia Pacific ex Japan Index, produced a healthy total return of 35.7% over the 12-month period. Pleasingly, Aberdeen New Dawn Investment Trust did even better, with its net asset value and share price producing total returns of 43.4% and 48.3% respectively.

“Comparisons with the NAV from the period before Covid-19 started affecting the markets are also positive, with NAV and share price both up by more than 30% since the end of January 2020. It is pleasing to note that the Company has built up a good long term performance record and is ahead of the benchmark over one, three and five years.”

James Thom and Gabriel Sacks, investment managers of Aberdeen New Dawn Investment Trust, added: “Looking ahead, the pandemic remains relentless despite the advent of various vaccines and mass inoculation drives across many advanced countries. Many of the world’s poorer nations, including several in Asia, still have limited to no access to these remedies. As a result, the uneven vaccinations globally are creating ripple effects.

“Left unchecked, Covid-19 is quickly mutating into more transmissible and deadlier forms that may undo the efficacy of vaccines that were developed just a few months ago. That said, we believe that governments and employers are better prepared now than when the pandemic started over a year ago. This is reflected in the more nuanced approach to lockdowns, as well as having built up the necessary infrastructure that will continue to allow many people to work from home.

“Meanwhile, geopolitical frictions continue to create uncertainties. In particular, is the jostling between the US and an increasingly more confident China, both pressing for global advantage across overlapping spheres of influence. Elsewhere, ructions in the Middle East and Eastern Europe are creating fresh instability in their respective regions.”

They continued: “The rebound in the global economy is also casting a shadow, as rising inflationary pressure accompanying the acceleration in business activity heightens concerns over a potential withdrawal of accommodative fiscal and monetary policies. We believe these are short-term issues arising from bottlenecks, as companies increase capacity to meet still-normalising demand. For now, governments and central banks are likely to maintain their expansionary policy in the face of uncertainty. The US, for example, is continuing to unveil new stimulus measures, given the economic slack that exists across world markets.

“Overall, we are cautiously optimistic. Although some pockets of the market appear overvalued, Asian stock valuations in general remain reasonably attractive compared to developed markets, especially over the longer term. As such, we believe that Asia remains compelling as an investment destination. Not only is it home to many attractive, well-managed companies, but it also provides exposure to many structural trends that will underpin growth prospects over that investment horizon.

“In particular, sectors such as technology, healthcare and domestic consumption are likely to benefit from a young and increasingly affluent population, with under-developed segments that will provide companies within Aberdeen New Dawn Investment Trust the opportunity to continue expanding for many decades to come.”