Meet The Manager - Henderson Far East Income Limited
Mike Kerley joined Henderson in 2004 to manage Pacific equities and has managed Henderson Far East Income since 2007. He has 15 years' investment experience in the Asian market, previously with Invesco Asset Management where he developed a value driven investment style.
Fund Manager's Commentary – April 2013
Asian markets continued to move higher in April despite weaker US and Chinese economic data, an outbreak of bird flu in China and bombings in Boston. In addition the continued optimism towards Japan led to some portfolio outflows as investors allocated towards Japan and away from the rest of the region. The liquidity conditions, however, remain supportive and the search for yield in a low interest rate environment continues to support equity markets and especially equities with attractive dividend yields. The best performing markets, after Japan, were the higher yielding markets of Australia, New Zealand and Taiwan while India was also well supported. The laggards were Korea and China as investors continued to worry about the former’s eroding competitiveness in a weak yen environment while weak gross domestic product (GDP) growth and industrial production numbers curtailed the performance of the latter. From a sector perspective energy and materials continued to struggle while defensives such as telecommunications and consumer staples continued their outperformance.
Despite being underweight some of the months’ best performing markets, the portfolio outperformed in April. The strength of telecom stocks in general, and in particular Telecom New Zealand and Telkom Indonesia, as well as the improved performance of Chinese banks was beneficial. The strength of the Indian market where we are modestly weighted was the biggest detractor.
During the month we switched Asia Cement into Taiwan Cement and added Taiwanese waste management company Cleanaway to the portfolio. This was funded by selling Korean Reinsurance and by trimming some positions in a few defensive high yield stocks, which had performed extremely well in recent weeks.
We remain positive on Asia in the medium to long term owing to strong economic fundamentals and compelling valuations. In the short term, however, we expect markets will be dictated by the political and economic turmoil in Europe and the strength of the recovery in the US and China. The portfolio remains domestically focused with a bias towards companies with dividend growth as the valuations of some traditional yielding sectors have become quite stretched.
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