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  • An actively managed concentrated portfolio of Asia excluding Japan listed companies, Ellerston Asian Investments (EAI), fell 1.78 per cent (net) in October
  • All the while the MSCI Asia ex-Japan Index, used as a benchmark, fell 2.56 per cent
  • EAI’s dividend profit reserve was roughly 13.4 cents per share as of the end of October 2021, which includes FY22 profits as it aims to create a dividend policy
  • In October, investors’ primary concerns were; continued China worries, the Q3 2021 reporting season, and central bank tapering/tightening
  • Shares in EAI were down 0.46 per cent on the market today to close at $1.09

An actively managed concentrated portfolio of Asia excluding Japan listed companies, Ellerston Asian Investments (EAI), fell 1.78 per cent (net) in October.

All the while the MSCI Asia excluding Japan Index, used as a benchmark, fell 2.56 per cent.

EAI intends to create a dividend policy that is sustainable and based on many years of profit reserves.

EAI’s dividend profit reserve was roughly 13.4 cents per share as of the end of October 2021, which includes FY22 profits.

In October, investors’ primary concerns were; continued China worries, the Q3 2021 reporting season, and central bank tapering/tightening.

On the China front, the company said October saw a respite, however, issues such as regulatory reform, power outages, property sector leverage and COVID remain concerns for investors.

“We continue to see these factors as headwinds for economic growth into year end,” the company said in a statement to the market.

“We also believe the likelihood of aggressive stimulus is low given the strong growth recorded in 1H2021, high inflation and the resilience of the domestic A-share market this year. We therefore remain selective with regards to our China exposure.”

The Q3 21 reporting season revealed two visible trends, according to the company, solid top-line growth for most Asian firms and margin pressure owing to cost push inflation from increasing raw material costs, increased salaries, and supply chain difficulties.

“Management commentary suggests that these cost pressures are likely to persist for some time,” the company said.

“In this environment, companies with the pricing power to pass on higher input costs are likely to do well. EAI is a quality biased portfolio. As such, we hold a number of companies such as TSMC, Mediatek, Samsung, CATL and Reliance with the ability to protect and even grow margins when costs are rising.”

Shares in EAI were down 0.46 per cent on the market today to close at $1.09.

EAI by the numbers
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