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Weak markets may present golden opportunities

Invesco Asia Trust 16 March 2020 Review
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Invesco Asia Trust

Weak markets may present golden opportunities

Investment trusts
Asia ex-Japan equities

16 March 2020

Price

240.0p

Market cap

£160.5m

AUM

£193.2m

NAV*

267.5p

Discount to NAV

10.3%

NAV**

271.3p

Discount to NAV

11.5%

*Excluding income. **Including income. As at 12 March 2020.

Yield

2.4%

Ordinary shares in issue

66.9m

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

310.0p

237.0p

342.6p

271.3p

**Including income.

Gearing

Gross*

0.0%

Net*

5.3%

*As at 31 January 2020.

Analysts

Helena Coles

+44 (0)20 3681 2522

Mel Jenner

+44 (0)20 3077 5720

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

Invesco Asia Trust’s (IAT’s) primary objective is to deliver long-term capital returns through investing in Asian companies that are worth more than the market believes, following a rigorous bottom-up process. Over the past 10 years the trust has generated an annualised NAV total return of 10%. Investor sentiment towards Asian equities has suffered from an extended period of negative events, including trade disputes, political protests in Hong Kong and, more recently, the outbreak of the coronavirus. The manager, Ian Hargreaves, has a long-term investment horizon and believes golden opportunities are presenting themselves in this environment.

Asian equities at a steep discount to global equities

Source: Refinitiv, Edison Investment Research

The market opportunity

Expectations for an economic recovery in Asia this year have been delayed by the outbreak of the coronavirus. It is too early to tell the full extent of its impact or what further government policy responses may materialise. However, as shown in the chart above, Asian equity valuations are trading at a discount to global equities and, over the long term, the region’s rate of economic growth should continue to be meaningfully higher than that of developed markets.

Why consider investing in Invesco Asia Trust?

The manager has over 25 years’ experience investing in Asian equities, following a bottom-up process. He is supported by a well-resourced team of five Asian equity investment professionals.

The underlying portfolio generates good revenue income, underpinning the trust’s ability to grow its dividends.

The board is proactive and committed to promoting the trust and shareholders’ interests.

Discounts have widened, scope to improve

IAT currently trades on an 11.5% discount to cum-income NAV, which is significantly in line with the three-year average of 11.6%. The discount appeared to be on a narrowing trend following the board’s efforts to broaden the appeal of the trust in late 2018; however, sentiment for Asian equities is currently weak and there is scope for the discount to narrow should this improve.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Invesco Asia Trust’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.

10 January 2020: interim report for six months ending 30 October 2019. NAV TR -3.7% versus benchmark TR -1.7%. Share price TR -6.7%. Declared interim dividend of 3.4p per share.

17 October 2019: announced appointment of Vanessa Donegan as non-executive director with immediate effect.

Forthcoming

Capital structure

Fund details

AGM

September 2020

Ongoing charges

1.0%

Group

Invesco Asset Management

Annual results

July 2020

Net gearing

5.3%

Manager

Ian Hargreaves

Year end

30 April

Annual mgmt fee

Tiered (see page 8)

Address

43–45 Portman Square
London W1H 6LY

Dividend paid

November, April

Performance fee

None

Launch date

July 1995

Trust life

Indefinite

Phone

+44 (0)20 3753 1000

Continuation vote

Three yearly, next 2022

Loan facilities

£20m multi-currency

Website

www.invesco.co.uk

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

An interim dividend was introduced in FY19. Dividends are payable in November and April (previously January and September).

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

Shareholder base (as at 26 February 2020)

Portfolio exposure by sector (as at 31 January 2020, ex-cash)

Top 10 holdings (at 31 January 2020)

Portfolio weight %

Company

Country

Sector

January 2020

January 2019*

Tencent

Hong Kong

Software & services

6.0

4.2

TSMC

Taiwan

Semiconductors & semiconductor equipment

5.7

3.7

Alibaba

China

Retailing

4.8

N/A

Samsung Electronics

South Korea

Technology hardware & equipment

4.7

3.8

ICICI Bank

India

Banks

3.8

2.8

NetEase

China

Software & services

3.7

N/A

AIA

Hong Kong

Insurance

3.2

3.3

United Overseas Bank

Singapore

Banks

3.2

N/A

Samsung Electronics (pref)

South Korea

Technology hardware & equipment

3.0

N/A

MediaTek

Taiwan

Semiconductors & semiconductor equipment

2.9

2.8

Top 10 (% of portfolio)

39.8

36.1

Source: Invesco Asia Trust, Edison Investment Research, Bloomberg, Morningstar, Refinitiv. Note: *N/A where not in end-January 2019 top 10.

Market outlook: Uncertain near-term prospects

The outlook for Asian equities is clouded by the outbreak of the coronavirus at a time when global economies had appeared to be poised for recovery. At the start of 2019, fears of recession were looming in an environment of synchronised global economic slowdown, exacerbated by geopolitical events such as the US-China trade dispute. Central banks reversed stances to withdraw liquidity and shrink balance sheets and resumed accommodative monetary policies. The US Federal Reserve cut interest rates three times, while the ECB and the People’s Bank of China also undertook stimulus measures. Recession was averted and towards the end of the year, there were signs that global growth had stabilised, with the potential for a recovery in 2020. Global PMIs had turned, improvements were seen in several countries, including India and China. Inventories around the world were also at unusually low levels, which would normally bode well for an improvement in trade, suggesting a favourable backdrop for Asian economic growth. At the time of writing, however, the coronavirus is significantly disrupting manufacturing and consumer activity, which will dent near-term growth; China’s February manufacturing PMI recorded an all-time low of 35.7. However, it is too early to gauge the full impact of the virus and what further government responses may be.

Asia’s long-term economic prospects remain bright and, despite current disruptions, it should continue to show faster growth compared to advanced economies. Exhibit 2 (RHS) shows the IMF expects growth in the Asia-Pacific ex-Japan region to be significantly higher than that for advanced economies over the five years between 2019 and 2024. While the absolute figures may be subject to revision in response to the coronavirus and any other economic shocks, the trend for superior Asian growth should remain intact.

Exhibit 2: Market performance and valuation

Performance of indices (last five years, in £)

IMF October 2019 World Economic Outlook forecasts

Source: Refinitiv, Edison Investment Research

Fund profile: Long-term fundamental approach

Launched in 1995, IAT aims to provide long-term capital growth through investing in a well-diversified portfolio of companies listed in Asia. The trust changed its benchmark to the MSCI AC Asia ex-Japan index in 2015 (previously the MSCI Asia Pacific ex-Japan Index) to better reflect its primary focus on Asia and persistently low exposure to Australasia. However, the investment process is not constrained by the benchmark and the manager, Ian Hargreaves, employs a disciplined bottom-up investment process to find companies that are intrinsically undervalued on a long-term horizon of three to five years or more. The portfolio of c 50–70 stocks represents the manager’s highest-conviction investment ideas. Gearing is permitted up to 25% of net assets; at end-January 2020, IAT had net gearing of 5.3%.

The fund manager: Ian Hargreaves

The manager’s view: Golden opportunities are emerging

Hargreaves had hoped for an Asian economic recovery in 2020 but believes this will be delayed. In his view, the coronavirus is causing a significant demand shock as consumers are forced to stay at home and uncertainty hits sentiment. He also thinks comparisons with the SARS outbreak in 2003 are no longer relevant and the short-term economic impact could be far greater, noting that governments in China and the region have taken a much more draconian approach to containing the virus, while information is widely and often instantly transmitted to consumers. Hargreaves points out that the outbreak has accentuated some existing trends, for example, the shift to online activity and IAT is well positioned to benefit from its overweight exposure to Chinese internet companies. As a patient investor, the manager is looking to 2021 earnings potential and is focused on finding companies that are oversold, which are presenting a golden opportunity for the long term.

Asset allocation

Investment process: Well established and rigorous

The Invesco Asia team consists of six highly experienced fund managers and analysts and Hargreaves has been investing in the region for over 25 years, following a bottom-up approach. There are over 10,000 listed companies in Asia, which are initially screened against size, liquidity and environmental, social and governance criteria. This filter results in an investable universe of c 1,000 companies. The team conducts up to 1,000 company meetings per year and undertakes rigorous fundamental analysis to arrive at a company shortlist of around 100 stocks. Companies are evaluated against numerous factors, including industry dynamics, financial strength and management quality. Particular attention is paid to valuations and Hargreaves looks to buy companies that are trading at a significant discount to their long-term fair value, as he believes that, over time, share prices reflect true fundamentals. Shortlisted companies are ranked by their estimated total return over three years. Portfolio construction reflects the conviction levels behind the individual stocks, but also portfolio diversification and risk considerations.

Current portfolio positioning

Exhibits 3 and 4 show the portfolio’s exposures by country and sector at end-January 2020. Over the past year, IAT’s geographic weight has increased most notably to China (+8.5pp). This partly reflects the strong performance of several holdings, in particular, internet names such as Tencent, JD.com and NetEase. Hargreaves has also added a new position in A-share listed Suofeiya Home Collection, which manufactures and sells customised wardrobes and cabinets. The manager explains that new homes in China are mostly sold as a shell, without these items fitted as standard. Furthermore, the industry is very fragmented and Suofeiya is one of the leading players with the automation and scale to benefit from consolidation. The manager observes that China’s property completion cycle, which has been weak for the past two years, is due to rise and should support demand for the company’s products. Furthermore, the government is encouraging developers to offer basic furnished apartments, which in Hargreave’s view could help accelerate market consolidation for furniture companies, favouring players with scale.

IAT’s exposure to Taiwan increased by 2.6pp over the past year, partly reflecting strong outperformance from several of its holdings, including Mediatek and TSMC. The manager has also added to existing positions selectively. These included Delta Electronics, a dominant player in power supply technology in the electronics industry. Hargreaves believes the company’s expertise should allow it to capitalise on several exciting high-growth sectors, including industrial automation, 5G mobile technology and electric vehicles.

The manager continues to be positive on the outlook for India despite its economy slowing more severely than expected in 2019. This has presented him with opportunities to invest in several companies at, what he views to be, very attractive valuations. Some of the new Indian portfolio additions over the past 12 months were discussed in our September 2019 review. Hargreaves believes that India’s extended credit downcycle is near its trough, and that many policy reforms that depressed growth in the short-term, auger well for the longer-term. These include measures to improve the informal economy, such as de-monetisation and the introduction of a goods and sales tax. Hargreaves has initiated a new position in conglomerate, Larsen & Toubro. He is positive on the outlook for its core engineering and construction businesses (accounting for c 60% of revenues), as he believes the country has underinvested over the past few years and is poised to raise spending in line with nominal GDP growth as a new investment cycle begins. He has high regard for Larsen & Toubro’s professional management team and believes the company is well positioned to gain market share as construction activity improves. The manager notes that the company has been investing in IT and financial services businesses, which he thinks have hidden value, yet to be reflected in the company’s share price.

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

Portfolio end-January 2020

Portfolio end-January 2019

Change (pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

China

35.0

26.5

8.5

40.2

(5.2)

0.9

South Korea

17.6

16.5

1.1

13.7

3.9

1.3

Taiwan

14.8

12.2

2.6

13.7

1.1

1.1

India

14.3

15.0

(0.8)

10.6

3.7

1.3

Hong Kong

9.1

16.2

(7.2)

9.8

(0.8)

0.9

Singapore

3.2

2.5

0.6

3.6

(0.5)

0.9

Thailand

2.6

2.5

0.0

2.9

(0.3)

0.9

Australia

1.9

1.7

0.2

0.0

1.9

N/A

Indonesia

1.3

1.5

(0.3)

2.3

(1.1)

0.5

Malaysia

0.4

1.4

(1.0)

2.1

(1.7)

0.2

Japan

0.0

2.8

(2.8)

0.0

0.0

N/A

Philippines

0.0

1.2

(1.2)

1.1

(1.1)

0.0

Total

100.0

100.0

100.0

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

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

Portfolio end- January 2020

Portfolio end-January 2019

Change
(pp)

Benchmark weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Financials

30.1

31.1

(1.0)

22.7

7.4

1.3

Information technology

22.4

19.3

3.0

18.9

3.5

1.2

Communications services

14.3

10.9

3.3

14.9

(0.7)

1.0

Consumer discretionary

13.8

12.6

1.2

12.0

1.8

1.2

Industrials

6.8

6.5

0.2

6.6

0.2

1.0

Materials

3.9

6.0

(2.0)

4.2

(0.3)

0.9

Energy

2.4

4.3

(1.9)

3.8

(1.4)

0.6

Real estate

2.0

3.2

(1.2)

5.5

(3.5)

0.4

Healthcare

1.7

2.5

(0.8)

3.1

(1.4)

0.5

Consumer staples

1.9

2.3

(0.5)

5.2

(3.3)

0.4

Utilities

0.8

1.2

(0.4)

3.1

(2.3)

0.3

Total

100.0

100.0

100.0

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

Recent sales include Hong Kong-listed port operator, Qingdao Port, for which Invesco Fund Managers received an attractive offer for its aggregate holdings from a strategic buyer. IAT also trimmed its holding in Indian-listed HDFC Bank, a long-held position. The manager is cautious the stock could be volatile during a management transition period later this year, when its highly respected managing director, Aditya Puri, will retire without a successor. Hargreaves, however, continues to believe the company’s strong underlying business has excellent prospects and is well placed to benefit from an improvement in the credit cycle.

Performance: Strong long-term performance

Exhibits 6 and 7 show that IAT has delivered good long-term performance. The trust’s NAV total return has meaningfully outperformed its benchmark over five and 10 years, generating annualised gains of 9.1% and 9.9% respectively. The trust has performed largely in line with the benchmark over shorter periods, although the manager has a long-term investment discipline and is not influenced by near-term performance.

Exhibit 5: Five-year discrete performance data

12 months ending

Total share price return (%)

Total NAV return (%)

Benchmark* (%)

MSCI World (%)

FTSE All-Share (%)

MSCI AC Asia ex-Japan (%)

29/02/16

(7.8)

(9.2)

(13.2)

(0.7)

(7.6)

(11.5)

28/02/17

45.8

51.1

42.1

36.6

23.7

42.1

28/02/18

19.4

17.1

19.5

6.6

4.4

19.5

28/02/19

(3.8)

(4.8)

(4.7)

4.6

1.6

(4.7)

29/02/20

(0.1)

1.2

4.6

9.6

(2.1)

4.6

Source: Refinitiv. 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.

Exhibit 6: Investment trust performance to 29 February 2020

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

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, 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.

Exhibit 7: 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

(4.2)

(6.0)

(3.7)

(4.5)

(3.6)

5.0

22.2

NAV relative to benchmark

(2.2)

(3.1)

(2.3)

(3.2)

(5.3)

5.4

22.1

Price relative to CBOE UK All Companies

5.7

4.2

2.7

2.1

10.5

30.0

32.4

NAV relative to CBOE UK All Companies

7.9

7.4

4.3

3.4

8.6

30.4

32.3

Source: Refinitiv, Edison Investment Research. Note: Data to end-February 2020. Geometric calculation.

Exhibit 8: NAV total return performance relative to benchmark over three years

Source: Refinitiv, Edison Investment Research

Discount: Poor sentiment has hit share price

IAT is currently trading at an 11.5% discount to its cum-income NAV, which is significantly wider than its three-year average of 11.6%. The board considers a discount of less than 10%, in normal market conditions, is desirable. As shown in Exhibit 9, following the introduction of a number of measures to broaden the appeal of the trust, the discount started to narrow from late 2018 and IAT’s discount frequently traded below 10% through to mid-2019. However, the US-China trade dispute, political protests in Hong Kong and, more recently, the outbreak of the coronavirus, has significantly dented investor sentiment for Asian equity funds, and the discounts for IAT and its peers have widened.

Changes introduced by the board in late 2018 to help broaden the appeal of the trust, with the aim of reducing the discount, include the introduction of an interim dividend and the ability to use the company’s capital reserves if necessary; and a reduction in the management fee for assets above £250m. The board also has the ability (renewed annually) to repurchase up to 14.99% of the trust’s share capital.

Exhibit 9: Share price discount to NAV (including income) over three years (%)

Source: Refinitiv, Edison Investment Research

Capital structure and fees

IAT is a conventional investment trust with one class of share; there are currently 66.9m shares in issue and a further 8.1m held in treasury. Since the start of FY20, IAT has repurchased 3.6m shares at a total cost of £10.1m, representing 5.1% of total shares in issue (0.5m shares were repurchased in FY19). The trust is subject to a continuation vote; the next vote is at the September 2022 AGM.

Gearing is permitted up to 25% of net assets. The trust has a £20m multi-currency revolving credit facility with Bank of New York Mellon and at end-January 2020 it had net gearing of 5.3%. In 2018, the board agreed a new fee structure with Invesco Fund Managers. The annual fee of 0.75% per year continues to apply to assets up to £250m; however, a lower fee of 0.65% per year on assets over £250m was introduced. The fee is paid from the revenue and capital accounts in the proportion of 25:75 respectively, representing the board’s expected split of long-term returns from the portfolio.

Dividend policy and record

IAT’s primary objective is to deliver long-term capital growth; however, the underlying portfolio has also consistently delivered good dividend growth. An interim dividend was introduced in FY19 and the board also approved the use of capital reserves when necessary to smooth payments in years when they are not fully covered by revenue income. An FY20 interim dividend of 3.4p has been announced and represents a 21% increase over the previous year, which is all derived from income, reiterating the strong underlying revenue of the portfolio. The board has changed the timing of the dividend payments to align more closely with the receipt of income into the trust. Dividends are now payable in November and April (previously January and September).

Peer group comparison

Exhibit 10 shows the AIC Asia Pacific sector funds with a market capitalisation greater than £100m. IAT is the smallest among this group. Its NAV total returns over five and 10 years rank fourth and third respectively and are above the peer group average. Performance over the shorter one- and three-year periods lag the peer average, ranking eighth and seventh respectively. IAT has the joint highest dividend yield, and its discount to cum-fair NAV is wider than average; however, discounts have widened across the peer group since the outbreak of the coronavirus, reflecting generally weak sentiment for Asian equities.

Exhibit 10: Selected peer group as at 13 March 2020*

% unless stated

Market cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net
gearing

Dividend yield (%)

Invesco Asia

160.4

(11.7)

(1.0)

36.1

115.3

(8.1)

1.0

No

105

2.4

Aberdeen New Dawn

240.7

(5.0)

7.0

28.7

88.8

(9.9)

0.9

No

112

2.0

Asia Dragon

459.1

(2.4)

10.6

33.9

99.1

(8.4)

0.8

No

104

1.3

Pacific Assets

278.2

(9.8)

3.6

27.3

125.7

(7.0)

1.2

No

100

1.3

Pacific Horizon

174.6

(3.5)

18.7

46.7

98.2

(3.4)

1.0

No

109

0.0

Schroder Asian Total Return

301.5

(7.0)

11.9

47.3

91.8

0.7

0.9

Yes

106

2.0

Schroder AsiaPacific

671.6

(5.4)

10.7

45.6

147.1

(4.0)

0.9

No

100

2.4

Witan Pacific

183.7

(8.2)

(4.0)

21.8

70.6

(3.6)

1.0

Yes

100

2.3

Average

308.7

(6.6)

7.2

35.9

104.6

(5.4)

1.0

104

1.7

Trust rank in sector (8 funds)

8

8

7

4

3

6

4

4

2

Source: Morningstar, Edison Investment Research. Note: *Performance data to 12 March 2020. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

The board

The IAT board consists of five independent non-executive directors, chaired by Neil Rogan (appointed in September 2017 and assumed his current role in July 2018). Vanessa Donegan was appointed to the board with effect from October 2019, bringing 37 years’ experience of managing Asian equity portfolios. She will replace Tom Maier who will retire this year after 11 years on the board. The other directors are Owen Jonathan (appointed March 2013 and became senior independent director in July 2018) and Fleur Meijs (December 2016).

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This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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Germany

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United Kingdom

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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