(Alliance News) - Aberdeen Asian Income Fund Ltd on Wednesday reported a loss in the first half of 2020 due to the effects of Covid-19, but maintained its dividend to hold onto its good track record for payouts.
The closed-end fund concentrated on Asian equities and bonds saw its net asset value fall in the first half ended June 30 by 6.5%, when taking into account dividend payments.
This is compared to a 7.0% decline of the MSCI All Countries Asia Pacific excluding Japan High Dividend Yield Index and an increase of 0.8% in the MSCI All Countries Asia Pacific excluding Japan Index.
Aberdeen Asian Income Fund's net asset value per share dropped by 8.6% to 207.57 pence per share on June 30 from 227.15p on December 31 and by 13% from 237.48p per share a year ago. The June figure is after two dividend payments during the period totalling 4.5p, giving a 5.0% annualised yield.
The investment company swung to a pretax loss of GBP25.7 million from a profit of GBP50.8 million a year prior. Revenue dropped to GBP9.0 million from GBP10.4 million the year before.
Aberdeen Asian Income Fund said it took a knock from Covid-19. The company's lack of investment in Chinese internet stocks, such as Tencent Holdings Ltd and Alibaba Group Holding Ltd, which both surged during the period, meant it missed out on some good gains. The company noted however that such tech stocks don't provide much in the way of dividend income.
Singapore and Hong Kong markets weighed on the company's performance as well, especially in the finance sector.
These hits were partially offset by Aberdeen Asian Income Fund's holding in restaurant company Yum China which stayed afloat thanks to an increase in demand for its delivery business and then recovered quickly "due to better operational resilience than the market initially feared".
The company announced a second quarterly dividend of 2.25 pence per share, bring a total of 4.5p per share for the first half - which is equal to the year prior - in a bid to hold onto its 'Association of Investment Companies dividend hero' status. Aberdeen Asian Income Fund said it would consider using its "healthy" cash reserves if necessary.
Going forward, the company noted the rather tumultuous global environment with Covid-19 spikes and the US-China trade war making economic forecasts difficult as well as pushing many companies' earnings outlooks down.
The company said: "Your manager's focus remains on investing in good quality, market leading companies that are tapped into Asia's structural growth. Their defensive traits, such as balance sheet strength, visible revenue streams and healthy profit margins, should enable them to ride out the current crisis, while continuing to pay out a decent dividend.
"Moreover, your manager continues to evaluate the new trends that have emerged during the pandemic, such as e-commerce and online activity, alongside longer-term tectonic shifts, such as rising demand in Asia for healthcare and infrastructure."
Aberdeen Asian Income Fund shares were up 0.2% at 188.34 pence on Wednesday morning in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Abrdn Asn Inc (AAIF)