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Aberdeen Asian Income Fund Limited

 

Objective

The objective of Aberdeen Asian Income Fund Limited is to provide investors with a total return primarily through investing in Asian Pacific securities, including those with an above-average yield. The Company does not expect, at least initially, to have any significant Japanese exposure.

Manager's Monthly Report

October 2008


Markets & Economic Overview

Asian equity markets fell sharply in September, following the financial sector upheaval, which has spread from the US to Europe, and US lawmakers’ initial rejection of the Treasury’s US$700bn rescue package. Regional economic growth continued to contract further as demand for exports from the West weakened. Taiwan launched an economic stimulus package, while Korea and Indonesia cut taxes. Retreating commodity prices helped inflation moderate across most of the region, although prices rose in the Philippines and Malaysia. China and Taiwan cut interest rates (the former for the first time in more than six years), whereas Indonesia, the Philippines and Thailand raised rates. In Thailand, Somchai Wongsawat took over as prime minister after Samak Sundaravej was forced out; Malaysian opposition leader Anwar Ibrahim, having served a five-year ban, was sworn in to parliament after winning a by-election.

Portfolio news

In September, we pared Hong Kong-listed utility CLP and Malaysia’s Public Bank, following a period of strong performance. Conversely, we added selectively to holdings that we believe will emerge from the current turmoil in a stronger position, including Australia’s QBE Insurance, Malaysia’s Digi.com and Singapore Press Holdings.

Strategy & Outlook

Looking ahead, markets are likely to remain unsettled as the worsening credit crisis takes its toll on the global financial sector. Global economic growth is expected to slow further, particularly with the massive job losses from the rapid consolidation in the financial sector worldwide. Meanwhile, Asia’s dependence on exports makes it susceptible to the slowdown in the West, even though it remains the fastest-growing region for now. On a brighter note, inflation appears to be receding, with the retreat in the prices of oil and other commodities. This should alleviate pressures on corporate margins and wages, and enable policymakers to pursue growth more freely. Although we expect corporate earnings growth to stall, we are optimistic that Asia, with its quality companies, will weather the downturn. In addition, any indiscriminate selling may present opportunities for us to add to our preferred holdings.


Source: Monthly Factsheet Aberdeen Asset Managers Limited

22 October 2008


Hugh Young, managing director, Aberdeen Asset Management Asia, gives an update on Asia Pacific equities.



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Hugh Young