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Still finding attractive investment opportunities

Invesco Asia Trust 3 October 2017 Review
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Invesco Asia Trust

Still finding attractive investment opportunities

Investment trusts

3 October 2017

Price

280.0p

Market cap

£199m

AUM

£225m

NAV*

304.9p

Discount to NAV

8.2%

NAV**

309.9p

Discount to NAV

9.7%

*Excluding income. **Including income. As at 29 August 2017.

Yield

1.5%

Ordinary shares in issue

70.9m

Code

IAT

Primary exchange

LSE

AIC sector

Asia Pacific ex-Japan

Benchmark

MSCI AC Asia ex-Japan

Share price/discount performance

Three-year performance vs index

52-week high/low

291.3p

222.0p

323.9p

253.1p

**Including income.

Gearing

Gross*

0.0%

Net cash*

1.3%

*As at 31 August 2017

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Invesco Asia Trust is a research client of Edison Investment Research Limited

Invesco Asia Trust (IAT) seeks capital appreciation from a diversified portfolio of Asian equities across the market cap spectrum. Despite a re-rating of global equities, the manager is still finding attractive investment opportunities across a variety of sectors and geographies. IAT is benchmarked against the MSCI AC Asia ex-Japan index; its NAV total return has outperformed over one, three, five and 10 years. It has also outperformed peers over these periods, ranking first over five years. The board actively manages the share price discount to ex-income NAV via share repurchases. Despite the focus on capital growth, IAT’s annual dividends have increased or been maintained every year since 2001.

12 months ending

Share price
(%)

NAV
(%)

Benchmark*
(%)

MSCI World
(%)

FTSE All-Share
(%)

30/09/13

11.9

9.6

7.1

20.6

18.9

30/09/14

18.7

17.1

6.1

12.7

6.1

30/09/15

(6.8)

(6.5)

(8.4)

2.1

(2.3)

30/09/16

42.9

41.9

36.6

30.6

16.8

30/09/17

20.6

20.2

19.1

15.0

11.9

Source: Thomson Datastream. Note: All % on a total return basis in GBP. *Benchmark is MSCI AC Asia Pacific ex-Japan until 30 April 2015 and MSCI AC Asia ex-Japan thereafter.

Investment strategy: Investing across cap spectrum

IAT is managed by Ian Hargreaves, who follows an unconstrained, bottom-up process, investing across the market cap spectrum (c 20% of the portfolio is below $3bn); sector and geographic exposures can vary significantly from the benchmark. He seeks companies with strong fundamentals that are trading at a discount to the value of their underlying businesses and is able to draw on the ideas of the well-resourced Invesco Perpetual Asia-Pacific team. Gearing of up to 25% of net assets is permitted, but in practice is between 0% and 5%.

Market outlook: Asian equities relatively attractive

Global equities have re-rated in recent months as investors have focused on an improvement in corporate earnings as a result of a synchronised pick-up in the world economy. Albeit on a smaller forward P/E multiple discount than the five-year average, Asia-Pacific equities remain attractively valued compared to world equities. Investors wanting exposure to the region may be interested in an actively managed, diversified fund, with a consistently good performance track record, that seeks to generate long-term growth by investing in undervalued companies.

Valuation: Share repurchases over tenders

IAT is currently trading at an 8.2% discount to ex-income NAV. This is narrower than the averages of the last one, three, five and 10 years of 10.6%, 10.1%, 10.1% and 9.5% respectively. The board aims to maintain the ex-income discount below 10%; it has concluded that discretionary share repurchases are more effective at managing the discount than tender offers, which were previously used as the main method of discount management. Although IAT aims to generate long-term capital growth, its annual dividends have increased or been maintained every year since 2001. IAT’s current dividend yield is 1.5%.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

IAT’s objective is to provide long-term capital growth by investing in a diversified portfolio of Asian companies. On 1 May 2015 the trust adopted a new benchmark, MSCI AC Asia ex-Japan, in place of the former benchmark, MSCI AC Asia Pacific ex-Japan. While the new benchmark excludes Australasia, the trust may still invest in these markets.

11 August 2017: 15% of shares repurchased for cancellation in tender offer at a 3% discount to NAV (including costs).

10 August 2017: Neil Rogan appointed as a non-executive director.

28 June 2017: Annual report for 12 months ending 30 April 2017. NAV TR +40.6% versus benchmark TR +37.5%. Share price TR +42.9%.

28 June 2017: Annual dividend of 4.30p declared, +17.8% versus FY16.

2 May 2017: Proposed tender for up to 15% of issued share capital at 2% discount to NAV minus costs.

Forthcoming

Capital structure

Fund details

AGM

August 2018

Ongoing charges

0.95%

Group

Invesco Asset Management Ltd

Interim results

December 2017

Net cash

1.3%

Manager

Ian Hargreaves

Year end

30 April

Annual mgmt fee

0.75%

Address

125 London Wall
London EC2Y 5AS

Dividend paid

July/August

Performance fee

None

Launch date

July 1995

Trust life

Indefinite

Phone

+44 (0)20 3753 1000

Continuation vote

Three-yearly, next in 2019

Loan facilities

£20m multi-currency

Website

www.invescoperpetual.co.uk

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

Dividends are paid annually in July/August. Income is a by-product of stock selection and there is no yield target.

Renewed annually, the trust has authority to purchase up to 14.99% and allot up to 5% of issued share capital. Includes tender offers and exercise of warrants.

Shareholder base (as at 31 August 2017)

Portfolio exposure by sector (as at 31 August, ex-cash)

Top 10 holdings (as at 31 August 2017)

Portfolio weight %

Company

Country

Sector

31 August 2017

31 August 2016*

Samsung Electronics

South Korea

Technology hardware & equipment

6.7

7.4

Baidu (ADR)

China

Internet media

4.0

3.2

HDFC Bank

India

Banks

3.5

3.7

Taiwan Semiconductor Manufacturing

Taiwan

Semiconductor manufacturing

3.4

3.3

AIA

Hong Kong

Life insurance

3.3

3.1

NetEase (ADR)

China

Software

3.3

3.9

Hyundai Motor (preference shares)

South Korea

Automobiles

3.0

N/A

China Mobile (red chip)

China

Telecommunication services

2.7

4.2

CK Hutchison

Hong Kong

Industrial conglomerate

2.6

3.2

MINTH

China

Auto parts

2.6

3.3

Top 10 (% of holdings)

35.1

39.0

Source: Invesco Asia Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in August 2016 top 10.

Market outlook: Asian equities still at a discount

Exhibit 2 (left-hand side) shows that over the last five years, world equities have outperformed Asian and UK equities. This is primarily a function of the strength of US equities, which now represent c 60% of the MSCI World index. Returns from overseas equities to a UK-based investor have been particularly strong since mid-2016 due to sterling weakness.

While the global corporate earnings outlook has improved in recent months, equities in aggregate have re-rated (as shown in Exhibit 2, right-hand side). Asian equities, as represented by the Datastream Asia ex-Japan index, are now trading on a forward P/E multiple of 13.0x compared with 12.3x in late-2016. However, they remain on a discount to world equities. The current 17.1% discount compares with the 21.2% average of the last five years. Investors wanting exposure to the Asia-Pacific region may wish to consider an actively managed fund, with a consistently good performance track record, that seeks to invest in undervalued companies.

Exhibit 2: Market performance and valuation

Performance of indices (last five years, all in £)

DS Asia ex-Japan vs DS World valuation comparison

Source: Thomson Datastream, Edison Investment Research

Fund profile: Broad exposure to Asia-Pacific region

IAT was launched in July 1995 and aims to generate long-term capital growth from a portfolio of Asia ex-Japan and Australasian securities, diversified by sector and geography. The trust has been solely managed by Ian Hargreaves since 1 January 2015; he was previously co-manager with Stuart Parks. Since 1 May 2015, the trust has been benchmarked against the MSCI AC Asia ex-Japan index rather than the MSCI AC Asia-Pacific ex-Japan index. The change reflects IAT’s historical large underweight exposure to Australia, and brings the trust in line with most of its peers. There are investment limits in place which include: at the time of investment, exposure to any one company may not exceed 10% of total assets; up to 10% may be in unquoted investments; and up to 10% may be in warrants and options. Gearing of up to 25% of net assets is permitted.

The fund manager: Ian Hargreaves

The manager’s view: Still finding investment opportunities

Hargreaves comments that Asian stock markets have continued to move higher during 2017, which he considers quite surprising given the heightened tension between the US and North Korea. He suggests that this is a result of high levels of available liquidity, but cautions that if the current situation escalates, stock markets will crumple. For obvious reasons, the South Korean stock market has been more affected by the tension than other markets in the region, but the manager also views the new government as not being particularly equity market friendly; recent initiatives include encouraging telecom companies to lower their tariffs. Despite this backdrop, the manager has an overweight exposure to South Korea as the government is in favour of reducing the power of the chaebols (large family-owned business conglomerates), and company valuations look relatively attractive. There are also signs of an improvement in corporate governance in the country, albeit from a low base. For example, Samsung, which has increased its dividend, is buying back shares and offering higher visibility on its capital allocation.

Hargreaves notes the improvement in corporate earnings in the region; earnings growth estimates have risen over the course of 2017, from +10% to +20% for the year. This is the first positive year following five years of consistent negative earnings revisions. The manager suggests that investors have probably seen the best of the reacceleration in earnings growth. However, Asian equities remain more attractively valued than US equities and are experiencing better earnings momentum. In this environment Hargreaves is continuing to find interesting investment opportunities and he believes that Asian equity markets could continue to see capital inflows.

Asset allocation

Investment process: Bottom-up and macro aware

The manager aims to generate long-term capital growth from a relatively concentrated portfolio of c 60 Asian equities. The investment approach combines fundamental analysis with an assessment of the macro environment. IAT’s process is flexible and unconstrained, meaning portfolio exposure may be significantly different from the benchmark. When analysing a company, the manager gains an understanding of its key historical and future business drivers, to ascertain the strength of its market position and the quality of its management team. He seeks companies with strong fundamentals, which are undervalued versus their expected intrinsic worth. Small- and mid-sized companies are considered for inclusion in the portfolio as they are typically less well researched and often trade on more attractive valuations than larger companies. Companies with a market cap below $3bn currently comprise c 20% of the portfolio. The manager is able to draw on the resources of Invesco Perpetual’s five-strong Asia-Pacific investment team, each of whom travel to Asia three or four times a year, undertaking several hundred company meetings in aggregate.

Current portfolio positioning

At end-August 2017, IAT’s top 10 positions comprised 35.1% of the portfolio. This was a lower concentration than 39.0% at end-August 2016. There is one new name in the top 10: Hyundai Motor, while Samsung Electronics continues to be the largest position by some margin.

Exhibit 3: Portfolio geographic exposure vs benchmark (% unless stated)

Portfolio end-August 2017

Portfolio end-August 2016

Change (pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Hong Kong & China

40.3

42.6

(2.3)

45.5

(5.3)

0.9

South Korea

20.1

21.0

(0.9)

17.0

3.1

1.2

Taiwan

15.3

13.1

2.2

13.8

1.5

1.1

India

13.8

15.8

(2.0)

10.2

3.6

1.4

Indonesia

2.4

3.2

(0.8)

2.7

(0.2)

0.9

Singapore

2.1

1.7

0.4

4.3

(2.2)

0.5

Philippines

1.4

1.7

(0.3)

1.3

0.1

1.1

Malaysia

1.3

0.0

1.3

2.6

(1.3)

0.5

Japan

1.3

0.0

1.3

0.0

1.3

N/A

Thailand

1.0

0.0

1.0

2.5

(1.5)

0.4

Australia

1.0

0.9

0.1

0.0

1.0

N/A

Pakistan

0.0

0.0

0.0

0.1

(0.1)

0.0

100.0

100.0

100.0

Source: Invesco Asia Trust, Edison Investment Research. Note: Rebased for cash/gearing.

The trust’s geographic exposure is shown in Exhibit 3. Over the last 12 months, the largest changes in exposure were Taiwan (+2.2pp) and Hong Kong & China (-2.3pp). Exhibit 4 shows IAT’s sector exposure. Over the last 12 months, the largest increases in exposure are financials (including real estate, +5.0pp) and consumer staples (+2.3pp), while the largest decreases are materials (-3.8pp) and utilities (-2.5pp).

Exhibit 4: Portfolio sector exposure vs benchmark (% unless stated)

Portfolio end-August 2017

Portfolio end-August 2016

Change (pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Information technology

33.1

31.0

2.2

31.2

1.9

1.1

Financials

24.7

25.4

(0.7)

23.5

1.2

1.1

Consumer discretionary

11.5

12.3

(0.8)

9.1

2.5

1.3

Industrials

8.2

9.4

(1.2)

7.2

1.0

1.1

Real estate*

5.7

0.0

5.7

6.1

(0.4)

0.9

Telecom services

3.8

5.9

(2.1)

4.6

(0.8)

0.8

Materials

3.6

7.4

(3.8)

4.7

(1.1)

0.8

Utilities

3.1

5.7

(2.5)

3.0

0.1

1.0

Energy

2.4

3.0

(0.6)

4.2

(1.8)

0.6

Consumer staples

2.3

0.0

2.3

4.4

(2.0)

0.5

Healthcare

1.5

0.0

1.5

2.0

(0.5)

0.7

100.0

100.0

100.0

Source: Invesco Asia Trust, Edison Investment Research. Note: *Real estate was classified within financials at end-August 2017. Rebased for cash/gearing.

The manager looks for differentiated ideas, where a company’s business and share price performance are not unduly affected by the macro environment. New positions in the portfolio include MediaTek, Aurobindo Pharma and British American Tobacco Malaysia (BAT Malaysia). MediaTek is a Taiwanese designer of semiconductors, focusing on smartphones, digital televisions and wireless LAN (local area network) products. This is a stock that the manager has held in the past, but not for several years. Historically, MediaTek generated high margins due to its low-cost operations and was able to take share from market leader Qualcomm in the shift from 2G to 3G technology. However, MediaTek was on the back foot during the shift from 3G to 4G technology; its chips were inferior versus the competition’s and the industry pricing environment was also very competitive. As a result, MediaTek’s margins declined considerably, as did its share price. Hargreaves says that when he purchased the new position in MediaTek, the value of its investments and cash on its balance sheet were equal to half of its market cap, essentially offering investors the telecom business for free. The manager believes there is a good chance that MediaTek’s telecom business will turn around over the next couple of years, driven by new product launches, which should drive higher revenues and an improvement in margins.

Although the manager has decreased IAT’s Indian exposure over the last 12 months due to higher company valuations but a general lack of earnings momentum, he has identified an investment opportunity in Aurobindo Pharma. Despite price deflation in the generic drug industry, Aurobindo’s portfolio is not highly concentrated and its products are subject to relatively less price competition. The company is both a manufacturer and a distributor, which brings the benefits of scale and low cost. While competitors have suffered from problems with the US healthcare regulator (the FDA) regarding product quality, Aurobindo has had a stream of product approvals. At the time of purchase, its share price was more attractively valued than its competitors’. The manager considers that this is a contrarian position, purchased in anticipation of more difficult stock markets.

BAT Malaysia is IAT’s first exposure to the country for quite some time. The manager says that its stock price was depressed as a result of an increase in Malaysian tobacco excise tax, which led to a significant expansion of the grey tobacco market. He says that growth in the grey market has since stalled and BAT Malaysia is working hard to lower its cost base, such as shifting manufacturing from Malaysia to Indonesia. Hargreaves believes that the company’s profits have troughed and, if volumes recover, its operational leverage means investors will be surprised by the extent of its profit recovery. In the meantime, the stock has a c 6% dividend yield; the manager argues that investors are being paid to wait until there is an upturn in profits.

Performance: Strong medium- and long-term record

As shown in Exhibit 5 (right-hand side), absolute returns over the last 12 months have been higher than historical annualised returns in an environment of better corporate earnings and positive fund flows. IAT’s NAV and share price total returns of 20.2% and 20.6% are ahead of the benchmark’s 19.1% total return.

Exhibit 5: Investment trust performance to 30 September 2017

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Thomson Datastream, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised. Benchmark is MSCI AC Asia Pacific ex-Japan until 30 April 2015 and MSCI AC Asia ex-Japan thereafter.

Looking at IAT’s longer-term track record (Exhibit 6) shows it has a consistent record of outperformance. Both its NAV and share price total returns are meaningfully ahead of the benchmark over three, five and 10 years. Of interest to UK investors, IAT has also outperformed the FTSE All-Share index over almost all periods shown.

Exhibit 6: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to benchmark

1.0

0.1

(0.1)

1.2

7.7

26.0

37.9

NAV relative to benchmark

(0.3)

(0.2)

(1.2)

0.9

6.9

20.7

33.9

Price relative to FTSE All-Share

(2.7)

1.3

4.0

7.7

25.8

32.4

63.0

NAV relative to FTSE All-Share

(3.9)

1.0

2.8

7.4

24.7

26.8

58.3

Source: Thomson Datastream, Edison Investment Research. Note: Data to end-September 2017. Geometric calculation.

Exhibit 7: NAV total return performance relative to benchmark over three years

Source: Thomson Datastream, Edison Investment Research

Discount: No more tender offers

IAT’s current 8.2% share price discount to ex-income NAV is narrower than the 10.6% average of the last 12 months (range of 7.0% to 13.4%). It is also narrower than the averages of the last three, five and 10 years of 10.1%, 10.1% and 9.5% respectively. IAT aims to maintain the ex-income discount below 10%. In FY17 it averaged 10.9% versus 9.7% in FY16, so the board announced a tender offer for 15% of the trust’s shares outstanding (a policy that is in line with prior years); 12.5m shares were tendered at a price of 312.9p. However, the board has concluded that tender offers triggered as result of a specific discount level are not the most effective way of controlling the discount. If tenders continued, they would reduce the size of the trust, which could lead to liquidity issues and higher ongoing charges. Therefore, in future, the board will continue to undertake discretionary share repurchases, when accretive to NAV. (Shareholder authority is sought at each AGM to repurchase up to 14.99% of share capital.) Considerations include taking into account general market conditions and the discounts of comparable peers. During FY17, 2.0m (2.3%) of IAT’s shares were repurchased, enhancing the NAV by 0.26%.

Exhibit 8: Share price discount to NAV (excluding income) over three years (%)

Source: Thomson Datastream, Edison Investment Research

Capital structure and fees

IAT is a conventional investment trust with one class of share. There are currently 70.9m ordinary shares in issue. The trust may gear up to 25% of net assets, but in practice, if gearing is employed, it tends to be in a range of 0-5% – at end-August 2017, IAT was running a net cash position of 1.3%. The manager says that he will employ gearing when he considers that equity valuations are cheap. IAT has a 364-day, multi-currency revolving credit facility with Bank of New York Mellon, based on the lower of 25% of net asset value and £20m, at an interest rate of Libor +0.85%. Invesco Fund Managers is paid an annual management fee of 0.75% of net assets (excluding the value of any investment in funds managed by Invesco). The fee is allocated between capital and income in a ratio of 75:25, which is in line with the board’s expected split between long-term returns from capital gains and income. There is no performance fee. In FY17, ongoing charges were 1.02%, which was in line with the prior financial year. IAT is subject to a continuation vote, which is undertaken every three years; the next vote will be at the August 2019 AGM.

Dividend policy and record

While IAT has no specific income target, aiming to generate long-term capital growth, annual dividends are paid in July or August and have grown or been maintained every year since 2001. Over this period, they have compounded at an annual rate of 18.1%. The compound annual growth in dividends of 6.1% over the last five years is more modest; however, this is considerably higher than the rate of UK inflation. In FY17, the dividend was 4.3p, which was c 18% higher than the prior financial year and 1.1x covered by income. At the end of FY17, revenue reserves were c 16% higher year-on-year at £6.6m, which is sufficient to cover the FY17 dividend by 1.8x. IAT’s current dividend yield is 1.5%.

Peer group comparison

In Exhibit 9 we show the members of the AIC Asia Pacific ex-Japan sector, excluding three trusts with an income mandate and a smaller trust with a shorter performance track record. IAT has outperformed the weighted average of the peer group over all periods shown. Over both one and three years it ranks fifth out of 12 trusts. Over five years, it ranks first (28.5pp ahead of the average) and over 10 years, it ranks third (22.9pp ahead of the average). IAT’s discount and ongoing charge are broadly average, and it is one of two trusts currently running a net cash position. Its dividend yield is modestly above average, ranking fourth out of the 12 trusts shown.

Exhibit 9: Selected peer group as at 27 September 2017*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (ex-par)

Ongoing charge

Perf.
fee

Net
gearing

Dividend yield (%)

Invesco Asia Trust

198.4

19.0

56.8

106.9

179.9

(8.4)

1.0

No

99

1.5

Aberdeen Asian Smaller

353.4

7.9

22.5

59.8

278.3

(11.4)

1.8

No

110

1.0

Aberdeen New Dawn

254.0

18.9

33.4

51.6

140.2

(11.7)

0.9

No

109

1.8

Edinburgh Dragon

658.2

14.5

34.2

51.7

147.4

(11.6)

1.1

No

104

0.9

Fidelity Asian Values

249.7

8.8

53.1

102.1

146.9

(5.4)

1.3

No

98

1.2

JPMorgan Asian

326.7

24.0

68.0

95.2

86.5

(9.8)

0.8

No

100

4.0

Martin Currie Asia Unconstrained

135.1

15.1

39.6

57.3

53.0

(10.8)

1.1

No

102

2.1

Pacific Assets

291.0

5.2

36.0

82.7

84.5

(0.7)

1.3

No

100

1.1

Pacific Horizon

156.8

29.5

57.2

90.8

88.7

(8.2)

1.1

No

107

0.0

Schroder Asia Pacific

718.0

22.7

66.2

91.4

168.0

(8.8)

1.1

No

103

1.1

Schroder Asian TR Inv. Company

251.2

23.2

69.9

92.6

122.8

(0.3)

1.0

Yes

100

1.4

Scottish Oriental Smaller Cos

319.5

9.1

31.0

80.4

266.8

(8.5)

1.0

Yes

100

1.1

Weighted average

16.4

47.4

78.4

157.0

(8.4)

1.1

103

1.4

Trust rank in sector (12)

10

5

5

1

3

5

10

11

4

Source: Morningstar, Edison Investment Research. Note: TR=total return. *Performance data to 26 September 2017. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

The board

IAT has five directors on its board; all are non-executive and independent of the manager. Carol Ferguson was appointed in March 2009 and assumed the role of chairman in August 2013. Tom Maier was appointed in March 2009, Owen Jonathan in March 2013 and Fleur Meijs in December 2016. Following the retirement of James Robinson at the August 2017 AGM after more than 10 years’ service, IAT announced the appointment of Neil Rogan with effect from 1 September 2017. He has a background in investment management, including at Henderson and Gartmore. Rogan was appointed as a non-executive director of Murray Income Trust (MUT) in 2013 and will assume the role of chairman of MUT in November 2017.

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Invesco Asia Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. 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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority (Financial Conduct Authority). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Invesco Asia Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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