Aberdeen New Dawn Investment Trust PLC

An update from our investment manager, James Thom - 22 October 2020

We remain cautious and expect stock markets to stay volatile as we head into the final quarter of the year. We have seen a resurgence of Covid-19 in parts of the world, alongside uncertainty over the timeline of a potential vaccine. In addition, we anticipate more noise in the run-up to the US presidential election on Nov 3, amid fractious relations between China and the US. Tensions between the world’s two largest economies have spilled over from trade to other areas such as technology. We are also seeing increased regulatory scrutiny of Chinese companies listed in the US. Against such a backdrop, we expect governments and central banks to continue to shore up economies, which would be supportive of markets. 

While Asian stock valuations have risen from their March lows, we still see pockets of value, for instance, in banks and real estate. Scratching beneath the surface, country and sector divergences are set to become more pronounced as we progress through the economic recovery. In the longer term, the post-Covid-19 world could accelerate existing trends to which many of our portfolio holdings already have significant exposure. These trends include Asia’s increasing urbanisation and infrastructure needs, growing demand for healthcare and wealth management, as well as global shifts towards cloud computing, electric vehicles and 5G. We see promising prospects for quality Asian stocks with solid fundamentals that stand to benefit from the region’s structural growth.