Invesco Asia Trust — Seizing an opportunity

Invesco Asia Trust (LSE: IAT)

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Invesco Asia Trust — Seizing an opportunity

Despite the setback in Asian markets during Q122, Invesco Asia Trust (IAT) continues to generate a double-digit annualised NAV total return (c 11.5% in sterling over the past 10 years), supported by consistent income. It pays a regular six-monthly dividend equivalent to 2% of NAV (4% per year). In January 2022, the fund management team was enhanced when Fiona Yang was appointed co-manager alongside Ian Hargreaves, who has run the portfolio since 2011 (from 2015 as sole manager). IAT’s team targets double-digit annualised returns from each portfolio holding over a rolling three-year period.

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Investment Companies

Invesco Asia Trust

Seizing an opportunity

Investment trusts
Asia ex-Japan equities

18 August 2022

Price

332p

Market cap

£222m

AUM

£254m

NAV*

376.5p

Discount to NAV

11.8%

NAV**

381.8p

Discount to NAV

13.0%

*Excluding income. **Including income. As at 16 August 2022.

Yield

4.6%

Ordinary shares in issue

66.9m

Code/ISIN

IAT/GB0004535307

Primary exchange

LSE

AIC sector

Asia Pacific ex-Japan

Benchmark

MSCI AC Asia ex-Japan

52-week high/low

372.0p

311.0p

406.9p

342.0p

**Including income.

Gearing

Net gearing at 30 June 2022

2.2%

Fund objective

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 benchmark excludes Australasia, the trust may still invest in these markets.

Bull points

A total return approach with relatively high dividend income and enhanced dividend policy.

IAT is able to use revenue and capital reserves when necessary.

Strong track record of manager Ian Hargreaves, supported by the co-manager Fiona Yang and an experienced team of eight Asia investment specialists.

Bear points

IAT has yet to build a track record of covering dividend with revenue, on a 4% yield.

Negative sentiment towards Chinese equities could impede performance.

Performance potential of an overweight position in Chinese stocks has yet to be realised.

Analyst

Victoria Chernykh

+44(0)20 3077 5700

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

Despite the setback in Asian markets during Q122, Invesco Asia Trust (IAT) continues to generate a double-digit annualised NAV total return (c 11.5% in sterling over the past 10 years), supported by consistent income. It pays a regular six-monthly dividend equivalent to 2% of NAV (4% per year). In January 2022, the fund management team was enhanced when Fiona Yang was appointed co-manager alongside Ian Hargreaves, who has run the portfolio since 2011 (from 2015 as sole manager). IAT’s team targets double-digit annualised returns from each portfolio holding over a rolling three-year period.

IAT outperforms Asian equities during 2021 and 2022

Source: Refinitiv, Edison Investment Research

Why IAT now?

The team believes that the current investment environment benefits skilful stock pickers, who can navigate volatile markets and invest in companies with strong future prospects, particularly in China and Indonesia. While it is hard to get complete comfort around China-Taiwan relations and global geopolitics, the portfolio managers believe that a slight overweight position in China, relative to the benchmark (see page 3), will provide enhanced returns in the future. During the recent period of weakness in China’s equity market, the managers observed that a similar level of stock valuations was last seen in 2015 and believe that there are undervalued investment opportunities in a range of different areas. While valuations remain low, they will continue to look for more buying opportunities.

The analyst’s view

Despite a challenging past 12 months for Asian equities, IAT’s NAV total return (TR) of -0.5% over the 12 months to end-July was cushioned by active management of the portfolio, which outperformed the benchmark (-8.2% TR). During 2021 the portfolio (56 holdings at 30 June 2022) was positioned away from technology/internet outperformers towards more cyclical/‘value’ stocks by design, and its one-year performance benefited considerably from blending growth and value styles. Hargreaves has also achieved solid absolute and relative performance over his tenure. We believe that dividend enhancement, introduced by the board in 2020 with a yield target of 4% of NAV per year and two semi-annual dividend payments, brings additional stability to the fund’s performance and underlines the board’s focus on total return.

The manager’s view: Continued conviction in China

Invesco held an optimistic tone at the start of 2022, but the war in Ukraine (which started on 24 February), increased other geopolitical risks (particularly relations between China and Taiwan) and changed Invesco’s outlook for 2022 to a more cautious one. The outlook for H222 darkened a bit further after the Politburo (the Chinese Communist Party’s top decision-making body) made no new stimulus announcement. It also cut its 2022 estimated gross domestic product (GDP) growth target.

Nevertheless, the manager believes that Asia ought to be on investors’ radars, as economic activity in the region remains stronger than in the developed world, corporate balance sheets are in good shape and, most importantly, equity market valuations are looking increasingly attractive, albeit with some scope for downward revisions to consensus earnings growth expectations for the region. Inflationary pressure across much of Asia is also less than in developed markets due to more modest monetary policy response to the pandemic. Consequently, Invesco expects a less aggressive interest rate tightening cycle across Asia than in many Western economies.

The portfolio managers hold a more optimistic view over China than one year ago. They believe that the country’s macroeconomic situation has room for improvement, as the country adjusts to the authorities’ zero COVID-19 strategy. At the same time, China can implement monetary easing and stimulating fiscal policy to revive its economy and offset the negative effects of prolonged lockdowns.

In addition, the recent period of regulatory tightening for corporates in ‘new economy sectors’ appears to be over. Intended by the Chinese government to promote ‘common prosperity’, inclusive economic growth and exercise more control over the financial system during 2021, these measures resulted in a broad drop in equity valuations (China including Hong Kong accounts for c 47% of the MSCI AC Asia ex-Japan Index). The trailing price-to-book (P/B) ratios of China (the H-share market) stand at c 1.5x and the MSCI AC Asia ex-Japan Index stands at c 1.6x (at end-June 2022), below the 15-year historical averages of c 2.0x and c 1.75x, respectively, and down from 2021 highs (sources: Invesco, Refinitiv). Large differences in valuation between countries remain, with China equities on particularly attractive valuations.

Exhibit 1: Performance of Chinese equities relative to Asian equities over five years

Source: Refinitiv

Despite renewed concerns about US/China tensions, particularly over Taiwan, Invesco believes that China will be doing everything it can to avoid targeted sanctions from the US and Europe. According to Invesco, China’s chief concern is trying to contain the spread of the omicron variant and support GDP growth, while also still being dependent on Taiwan for high-end technology and semiconductors, which it will continue to be so for the foreseeable future.

Portfolio positioning

At end-June 2022, the portfolio had 56 holdings in line with its 50–60 range (54 at end-February 2022). Exhibits 2 and 3 show the fund’s exposures by country and sector at end-February 2022 and illustrate its differentiation from the benchmark MSCI AC Asia ex-Japan Index.

The largest weighting in the portfolio at 48.6% (at end-June 2022) is to Hong Kong and China. The previously underweight position (of c 8.0pp), which the company had two years ago, has gradually been reduced to a slight overweight position +1.4pp over the index (47.2%), reflecting the managers’ view that investment risk now appears to be better rewarded. The managers are comfortable with their current positioning in China given that the recent period of regulatory tightening appears to be over, while China is at the start of an easing cycle, in contrast to developed markets where policy is being tightened. The authorities’ zero-COVID strategy is a source of near-term uncertainty, but one which is likely to normalise over time. Given IAT’s strategy to populate the portfolio with undervalued companies, the shift in exposure towards China also reflects the team’s confidence in the valuation opportunity in selected Chinese equities.

The other two notable overweight positions are Indonesia (3.7pp) and Australia (3.9pp). The largest underweight (3.9pp) is in Taiwan. The managers have reduced Taiwanese exposure, given the holdings’ strong performance, particularly within the technology sector, and reinvested profits elsewhere, notably into China, Indonesia and Australia. Taiwan stepped down to the fourth position in IAT’s country having been second at December 2021.

Exhibit 2: Portfolio geographic exposure vs benchmark (% unless stated)

Portfolio end- June 2022

Portfolio end- December 2021

Change
(pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Hong Kong & China

48.4

42.3

6.1

47.2

1.4

1.0

India

13.1

14.0

(0.9)

14.2

(1.1)

0.9

South Korea

12.3

14.4

(2.1)

12.5

(0.3)

1.0

Taiwan

12.3

16.6

(4.3)

16.2

(3.9)

0.8

Indonesia

5.7

5.1

0.6

2.0

3.7

2.8

Australia

3.9

2.3

1.6

0.0

3.9

N/A

Singapore

2.4

3.4

(1.0)

3.4

(1.0)

0.7

Thailand

1.9

1.9

(0.0)

2.1

(0.2)

0.9

Philippines

0.0

0.0

0.0

0.8

(0.8)

0.0

Malaysia

0.0

0.0

0.0

1.6

(1.6)

0.0

Total:

100.0

100.0

100.0

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

During the highly volatile market for Chinese internet stocks over the past 12 months, the managers seized the opportunity to add to selective companies, where they are optimistic on their medium-term prospects. These included Ming Yang Smart Energy, JD.com and Sands China. The team took some profits from China Overseas Land & Investment (COLI).

The team continues to have an overweight position in Indonesia, even after taking profits from Telkom Indonesia after a period of strong performance. The managers believe that near-term economic uncertainty is starting to lift, and valuations still appear attractive. Over H122, the team invested in Indonesian cement producer Semen Indonesia. The managers believe there is underappreciated long-term growth potential despite near-term headwinds due to higher input costs. In India, where IAT is underweight the benchmark, the team reduced its Mahindra & Mahindra and Larsen & Toubro positions at a profit, and added to Aurobindo Pharma.

The team sold its holdings in Korean Bank KB Financial, Genting Singapore and Taiwanese technology stock Asustek Computer.

Over the six months to end June, the major sector changes were increases in consumer discretionary (3.1pp), industrials (1.3pp), materials and energy (both up 1.2pp) and a decrease in information technology (-6.3pp), see Exhibit 3.

At 24.6%, the consumer discretionary sector weight is the largest. Big online retailers, such as JD.com (top 10 holding, 3.9% of the portfolio) and Alibaba (top 10 holding, 4.8%), form the core of consumer discretionary exposure. Other notable sector holdings include the Indonesian auto-conglomerate Astra and Gree Electric Appliances, a Chinese air conditioner manufacturer.

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

Portfolio end- June 2022

Portfolio end- December 2021

Change (pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Consumer discretionary

24.6

21.5

3.1

15.8

8.8

1.6

Financials

23.4

24.3

(0.9)

20.4

3.0

1.1

Information technology

15.5

21.8

(6.3)

21.4

(5.9)

0.7

Communication services

10.2

10.8

(0.6)

10.4

(0.2)

1.0

Industrials

9.2

7.9

1.3

6.6

2.6

1.4

Real estate

4.9

4.9

(0.1)

4.1

0.7

1.2

Materials

4.4

3.1

1.2

5.2

(0.8)

0.8

Consumer staples

2.7

2.4

0.3

5.3

(2.6)

0.5

Healthcare

2.6

1.8

0.8

4.0

(1.4)

0.6

Energy

1.2

0.0

1.2

3.7

(2.4)

0.3

Utilities

1.2

1.3

(0.1)

3.1

(1.8)

0.4

Total:

100.0

100.0

100.0

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

Within financials, the second largest sector (23.4%), IAT has exposure to banks and insurers, which serve as consumer proxies and are beneficiaries of interest rate normalisation with solid capital levels.

The third largest sector weighting, at 15.5%, is still information technology, reduced as the team trimmed sizeable holdings, such as Hon Hai Precision Industry and Asustek Computer. The managers continue to have selected, sizable positions in the technology sector and are optimistic about their prospects, favouring companies within semiconductor and specialised parts space (TSMC, Samsung Electronics).

Within the energy sector, the managers introduced Worley, an Australian engineering oil and gas company, and within materials LG Chem, a South Korean chemical manufacturer.

Exhibit 4: Top 10 holdings (%)

Company

Country

Industry*

30 June 2022 (%)

28 February 2022 (%)

Change (pp)

TSMC

Taiwan

Semiconductors & semiconductor equipment

5.9

7.3

(1.4)

Tencent – R

China

Software & services

5.6

6.0

(0.4)

Samsung Electronics

South Korea

Technology hardware & equipment

5.0

6.3

(1.3)

Alibaba – R

China

Retailing

4.8

3.7

1.1

JD.com – R

China

Retailing

3.9

3.1

0.8

AIA

Hong Kong

Insurance

3.7

3.0

0.7

MingYang Smart Energy – A

China

Energy

3.6

2.7

0.9

Housing Development Finance Corporation

India

Real estate

3.3

3.5

(0.2)

ICICI Bank – ADR**

India

Banks

3.1

3.5

(0.4)

Astra International

Indonesia

Automobiles and components

2.7

N/A

N/A

Top 10 (as % portfolio)

41.6

N/A

Source: Invesco Asia Trust, Edison Investment Research. Note: *Industry classification according to IAT **American depositary receipts.

Performance

IAT has consistently outperformed the benchmark over the longer term, including three, five and 10 years, as shown in Exhibit 5. Despite a difficult year for the financial markets thus far, IAT’s NAV TR has outperformed the MSCI AC Asia ex-Japan benchmark.

Stock selection in China was a key positive contributor to the last six months’ TR (to end-July 2022). A recent easing of lockdown restrictions, some better than-expected macro data and a sense (by IAT’s portfolio management team) that the regulatory crackdown may be over resulted in strong performances for IAT’s internet, property and auto related stocks. COLI was one of the biggest contributors, as it outperformed on signs of policy support for the property sector. Another notable performer was Ming Yang Smart Energy on market expectations that wind turbine manufacturers should benefit from a H222 pick-up in installation projects. The portfolio managers believe that recent commodity price weakness should also help margins recover. Suofeiya also made strong gains, with the custom furniture manufacturer benefiting from signs of a mild recovery in the still challenging property market.

Exhibit 5: Investment company performance to 31 July 2022

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

Price, NAV and benchmark total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three- and five-year performance figures annualised. Data to end-July 2022.

Stock selection in India also added value. Mahindra & Mahindra’s share price hit record highs as market share gains in SUVs and a cyclical recovery in LCVs (light commercial vehicles) helped drive profits growth, with its tractor business also expected to enjoy a recovery in 2023. The portfolio’s exposure to Indonesia contributed positively to performance, with Bank Negara Indonesia the biggest single contributor, and Astra International and Telkom Indonesia also performing strongly.

IAT’s underweight position in the technology sector benefited relative to the benchmark performance. The five-year discrete performance data in Exhibit 6 illustrate the visible relative performance boost over the 12 months to end July 2021. The 12-month data to end July in 2021 and 2022 illustrate that during recent China market sell-offs, the portfolio’s avoidance of highly valued, high growth stocks meant it was more defensive than the MSCI AC Asia ex-Japan Index and also the MSCI China All Shares Index.

Exhibit 6: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI AC Asia ex-Japan (%)

MSCI World
(%)

MSCI China All Shares (%)

31/07/18

0.9

2.4

6.0

13.1

(4.0)

31/07/19

7.7

3.0

4.2

11.6

5.9

31/07/20

(1.7)

3.3

5.1

0.6

18.3

31/07/21

32.8

25.5

12.7

28.1

0.6

31/07/22

(1.5)

(0.5)

(8.2)

4.3

(8.3)

Source: Refinitiv. Note: All % on a total return basis in pounds sterling.

In Exhibits 7 and 8 we present performance and other metrics relative to peers.

IAT exhibits a strong relative performance against its Asia Pacific Equity Income peer group of five funds and also country specialist funds within Asia. This strong relative performance is complemented by a competitive yield of c 4.6%.

Exhibit 7: Country specialist – Asia Pacific Equity Income peer group*

% 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

Gearing

Dividend yield (%)

Invesco Asia

222.6

(0.5)

28.9

36.0

196.3

(12.8)

1.0

No

102

4.6

abrdn Asian Income

369.3

1.2

14.4

29.9

91.7

(13.9)

1.0

No

111

4.5

Henderson Far East Income

433.9

(3.4)

(7.8)

5.1

74.5

1.6

1.1

No

105

8.5

JPMorgan Asia Growth & Income

360.1

(10.2)

7.8

24.6

149.4

(8.8)

0.8

No

104

5.2

Schroder Oriental Income

687.9

0.9

14.2

30.4

147.2

(4.8)

0.9

Yes

103

4.0

Sector average (5 funds)

414.8

(2.4)

11.5

25.2

131.8

(7.7)

0.9

105

5.4

MSCI AC Asia Pacific ex Japan HDY

4.5

4.6

16.4

77.1

4.4

Rank in sector

5

3

1

1

1

4

2

5

3

Source: Morningstar, Edison Investment Research, Bloomberg. Note: *Performance data to 31 July 2022 based on cum-fair NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

H122 has been challenging for global equities, and in Asia, for Chinese equities in particular. By the start of 2022 the managers had repositioned the portfolio more towards Chinese equities, which fell out of favour during 2021, eliminating the China underweight position. As shown in Exhibit 8, IAT ranks second over one and three years on an NAV TR basis, following Pacific Assets trust, which has typically had a large overweight position in India, the market that outperformed in the past capital years within Asia. IAT also ranks second over 10 years, following Pacific Horizon, which has performed very strongly over the long term, with exposure to high-growth names. Despite the high volatility of Chinese markets over the past 12 months, IAT’s balanced positioning, gradual building of its slight overweight of Chinese names over the benchmark and the markets’ rotation from growth to value have been reflected in IAT’s robust performance relative to peers.

Exhibit 8: Country specialist – Asia Pacific peer group*

% 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

Gearing

Dividend yield (%)

Invesco Asia

222.6

(0.5)

28.9

36.0

196.3

(12.8)

1.0

No

102

4.6

abrdn New Dawn

301.7

(8.4)

13.3

32.9

108.1

(13.5)

0.8

No

107

1.5

Asia Dragon

532.1

(9.7)

5.8

26.1

99.3

(11.5)

0.8

No

108

1.5

Pacific Assets

417.3

4.1

26.7

53.0

195.7

(10.8)

1.1

No

94

0.6

Pacific Horizon

620.1

(15.5)

91.6

113.2

297.8

(1.6)

0.8

No

99

0.0

Schroder Asian Total Return

455.5

(10.0)

21.2

44.7

184.1

(6.2)

0.8

Yes

108

2.0

Schroder Asia Pacific

844.9

(10.1)

16.5

30.1

159.0

(11.0)

0.9

No

100

1.9

Sector average (7 funds)

484.9

(7.2)

29.2

48.0

177.2

(9.6)

0.9

103

1.7

MSCI AC Asia Ex Japan

(8.5)

7.7

18.3

111.8

1.9

Rank in sector

7

2

2

4

2

4

2

4

1

Source: Morningstar, Edison Investment Research, Bloomberg. Note: *Performance data to 31 July 2022 based on cum-fair NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

Over five years IAT ranks fourth by NAV TR, in its Asia Pacific country specialist peer group, lagging its growth-style focused peers. We believe this is to be expected, given that growth names were outperforming for a number of years prior to 2021, when the market switched more into value names, while IAT’s balanced approach between growth and value meant it did not participate as fully on a relative basis in the growth stock momentum over that period.

The Association of Investment Companies moved IAT from the Asia Pacific sector into the Asia Pacific Equity Income sector in 2020. Considering the board’s initiative in August 2020 to introduce a regular six-monthly dividend equivalent to 2% of NAV, we believe the reclassification is justified.

Fund profile

Launched in 1995, IAT aims to provide long-term capital growth through investing in a well-diversified portfolio of companies listed in Asia. Invesco has managed IAT since its first day of trading on 11 July 1995, as IAT became one of two successor companies to Drayton Far Eastern investment trust. The benchmark is the MSCI AC Asia ex-Japan Index (the MSCI Asia Pacific ex-Japan Index prior to 2015), reflecting the trust’s primary focus on Asia and persistently low exposure to Australasia. The approach is team based, bottom up and valuation focused. The portfolio of c 50–60 stocks represents the manager’s highest-conviction investment ideas.

The fund managers Ian Hargreaves and Fiona Yang aim to outperform the market over three- to five-year rolling periods, following a bottom-up, contrarian approach. They look to buy companies with strong fundamentals, but that are ‘unloved’ by the market and trading at a significant discount, and the team targets a double-digit annualised return from each portfolio stock.

IAT enhanced its dividend policy in 2020 and income will continue to contribute materially to NAV and share price TRs. The board targets a dividend yield of 4% of NAV per year. Gearing is permitted up to 25% of net assets.

Board

The board appointed Sonya Huen Rogerson as a non-executive director on 26 July 2022 with immediate effect. She has over 20 years’ experience in legal matters, governance and compliance across a range of industries including financial services and countries in Asia-Pacific. As indicated in November 2021, Fleur Meijs stepped down from the board on 2 August 2022. Myriam Madden, who joined the board on 4 November 2021, took over from Fleur as audit chair. Owen Jonathan, the senior independent director, will retire at the forthcoming annual general meeting (AGM) in September 2022 after serving nine full years. The board is chaired by Neil Rogan and will comprise four directors after Owen Jonathan retires.


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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.

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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

1185 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

1185 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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New Zealand

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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

1185 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

1185 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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