Fund Manager's Commentary – April 2012

Asian markets were flat in April as uncertainty over elections in Greece and France and weaker US employment growth counteracted the benefit of European Central Bank (ECB) liquidity. Asian growth also moderated over the month as Chinese first quarter gross domestic product (GDP) grew by the slowest amount in three years (8.1%) and Indian industrial production disappointed market estimates. The best performing market was China, which was helped by the strength of the local ’A’ shares, which rallied following the increase of foreign investor quotas and a reduction in trading commission charges. The worst performing market was Taiwan following the announcement of a capital gains tax on share transactions to be implemented in 2013. With risk appetite rising, the defensive sectors of telecoms and consumer discretionary outperformed while materials and industrials lagged.

The portfolio benefited from the strength of China and the weakness of India. The underweight position in Australia was detrimental to performance but more than offset from the strength of telecoms and consumer discretionary.

We were fairly active over the month switching Sun Hung Kai Properties into Cheung Kong, Petronas Chemicals into Taiwan Cement and Yuanta Financial into Taiwan Mobile. We also added Indonesian coal miner Indo Tambangraya Mega and trimmed positions in CTCI and Digital China following strong performance.

Asian markets are attractively valued and we remain positive over the medium to long term. In the short term, however, we expect markets to remain volatile while investors digest news from Europe and the outlook for global growth.