Friday May 9, 10:01 AM
Raffles- Asia Investment Co - Interim Management Statement
Raffles- Asia Investment Co
09 May 2008
RAFFLES ASIA INVESTMENT COMPANY
INTERIM MANAGEMENT STATEMENT
This interim management statement covers the period from 1 Jan 2008 to 8 May
2008. It
has been produced for the sole purpose of providing information to the
Company's shareholders in accordance with the EU Transparency Directive 2004/109
/EC.
Investment Objective
To achieve long-term capital appreciation plus partial payment of gains via
dividends, through investment primarily in shares and debt securities (including
convertible instruments and warrants) issued by companies listed on the China,
Hong Kong, Jakarta, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand
and Vietnam.
Material Events and Transactions
There have been no material events or transactions that have taken place in the
period 1 Jan 2008 to 8 May 2008.
Financial Position and Performance
Net Asset: US$55,130,130.94 as at 31 March 2008
Net Asset Value per Share: US$1.82 as at 31 March 2008
Performance for the period from 1 Jan 2008 to 8 May 2008
In 1Q CY2008, RAIC declined 14.6% while the MSCI AC Far East ex-Japan Index fell
12.6%. Equity markets around the world were hit as major financial institutions
reported large write-downs in subprime-related mortgages. As sentiment soured,
institutional funds sold off their peripheral investment positions, especially
small caps, either in anticipation of redemptions or to meet them. Retail
investors, in turn were pressured into margin calls and this further exacerbated
the selling pressure. Consequently, the Fund, which has a bias towards small
caps, underperformed the Benchmark, though not by a significant margin. We are
not perturbed by the share price weakness in our companies, as their underlying
fundamentals remain intact in this current turmoil. The current indifference to
quality and value is a common bear market trait that we have seen many times
before. Such moments of panic provide excellent opportunities provided one keeps
a cool head. We are able to maintain our composure as our companies possess
robust balance sheets, are beneficiaries of long term secular trends which
should ensure above average growth. As their earnings have not been artificially
inflated during the last 5 years of easy credit, we should not see the earnings
decline that is currently hitting the finance and property sectors worldwide. To
quote the venerable Warren Buffet: "In the short run, the market is a voting
machine. In the long run, it's a weighing machine." We wait patiently with
confidence for the day when markets will weigh in our Fund's favour.
Notwithstanding the bearish climate, RAIC remains invested as long as we find
desirable businesses whose earnings are still growing and are priced at
attractive valuations. In our opinion, the returns potential of these
investments should compensate for the equity risk that we are taking (i.e. the
upside is greater than the downside), and the earnings and dividend yield
combined should exceed the current high inflation rates that we are witnessing
now. Our bias towards small to medium cap companies affords us access to
management; their businesses are easier to understand and to monitor than the
large cap conglomerates. The focus of the portfolio remains largely Asian
domestic consumption and a low exposure to exporters as we expect consumption to
wane in the OECD nations. In order to minimize the downside of the Fund, we keep
our valuations low, demand strong balance sheets and strong cash flows. During
this current credit crunch, many leveraged businesses are finding it difficult
to fund their working capital needs and borrowing costs are expected to rise
further. It is in this environment that our selected companies with strong
balance sheets should thrive and excel.
Controlled Undertakings
The Company has no controlled undertakings as at 8 May 2008.
NB: It is currently intended that the Interim Management Statements will be
announced via a regulatory news service through the Irish Stock Exchange but
will not be mailed to shareholders except on request.
Date: 9 May 2008
This announcement has been issued through the Companies Announcement Service of
The Irish Stock Exchange
This information is provided by RNS
The company news service from the London Stock Exchange
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