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From Special Report: Global Opportunities - May 2012

Mixed fortunes for Asia as Europe struggles on

Asia Pacific ex Japan markets generally fell in March and April, but still outperformed world markets

By Rebecca Clancy | Published May 28, 2012 | comments

Hugh Young, Angus Tulloch and Mark Mobius remain the top-performing managers in Asia, producing stellar returns in spite of macro pressures from Europe and high commodity prices.

Mr Young, manager of the £1.2bn Aberdeen Global Asian Smaller Companies fund, notes that Asian stockmarkets fell in March amid worries of a sharp economic slowdown in China, although losses had been capped by hopes of further quantitative easing (QE) in the US.

He observes that while inflation has started to ease in the region, persistently high oil prices “threatened to reverse the trend”.

This was most notable in China, the world’s second largest economy, where consumer prices rose 3.6 per cent compared with a year earlier, up from February’s 3.2 per cent, as bad weather and government policies pushed up food and fuel prices. However, it is still below the government’s 4 per cent target for the year.

Asia Pacific ex Japan markets generally fell in April as well, but still outperformed world markets. In April the markets hit were India and Taiwan, while Thailand and China made gains.

Industrials and materials were the worst performing sectors, while the consumer sector posted the greatest rises.

However, while Europe continues to struggle through the debt crisis, Mr Young says the effect on Asia has been “mixed”.

“Anaemic European demand hurt exports from China, Malaysia and Thailand, whereas Korea, Singapore and Taiwan saw electronics shipments improve,” he adds.

The Aberdeen Global Asian Smaller Companies fund is the best-performing fund in the IMA Asia Pacific ex Japan index over three years and five years with a volatility of 4.48.

It has returned 122.1 per cent in the three years to April 26 and 108.2 per cent in the five years to April 26.

This compares with the MSCI All Country Asia Pacific ex Japan index which returned 57.5 per cent in the past three years and 42.3 per cent in the past five years, according to FE. Within the fund the largest country weightings are Hong Kong listed stocks and companies based in Malaysia which each account for 17.4 per cent of the portfolio.

Mark Mobius’s £11.1bn Templeton Asian Growth fund was the second best performing fund in the five years to April 26, delivering 79.4 per cent.

The manager’s largest overweight position was in Thailand as of March 31, accounting for 23.3 per cent of the fund, while it makes up just a fraction of the MSCI All Country Asia Pacific ex Japan index.

Angus Tulloch’s £5.7bn First State Asia Pacific Leaders fund also ranked in the top five, and has south-east Asia as an overweight position in the portfolio. He says he expects macroeconomic volatility to continue in the medium term, but, as with the other top managers, he adds that he is using it as a buying opportunity.

Rebecca Clancy is senior news reporter at Investment Adviser

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