Aberdeen New Dawn Investment Trust PLC

An update from our investment manager, James Thom - 28 August 2020

We remain cautious about the near-term outlook for Asia given the apparent disconnect between equity prices, economic and corporate fundamentals. The recent jump in Covid-19 infections in Asia and other parts of the world further confuses the outlook for the region. As the market attempts to put a finger on when conditions will normalise against a shifting pandemic, we expect volatility to persist in the coming months.

Also complicating matters is a worrying geopolitical backdrop, especially as provocations between the US and China intensify in the lead-up to the US presidential elections in November. Nevertheless, we see a silver lining in the form of better data through the second half of the year as economies re-open. Already, this is borne out by improving leading manufacturing indicators for most Asian countries. Accommodative central banks also provide some support for stocks.

Asia remains home to a surfeit of good quality companies, with robust balance sheets, clear earnings drivers and healthy cash levels. These qualities position them well to ride out the difficult conditions. In addition, the region remains the fastest-growing in the world, with structural growth drivers that will continue to play out in years to come. These include trends that have accelerated during the pandemic, such as e-commerce and online activity, and secular shifts, including rising demand for healthcare and infrastructure. We stay disciplined in putting capital to work on our best ideas: ensuring the fund's largest weights are in quality companies with the highest potential returns.