(Alliance News) - Templeton Emerging Markets Investment Trust PLC on Monday reported growth in net asset value per share over the first half, outperforming its benchmark index.
At September 30, the trust's NAV per share stood at 884.1 pence, compared to 842.5p at March 31, a 4.9% increase.
Templeton Emerging Markets declared an interim dividend of 5.0p, flat on the year before. The trust also is paying a 2.6p special dividend for the interim period, following a GBP6.4 million special dividend from portfolio company Brilliance China Automotive.
In the six months to September 30, Templeton Emerging Markets' cumulative total return was 6.3%, ahead of its benchmark - the MSCI Emerging Markets Index - which gained 2.2% over the same period.
Chair Paul Manduca said: "Markets continued to be volatile in the period under review, with the continuing trade war between the US and China regularly creating news headlines. Tension between the US and China repeatedly escalates and then is partially defused, a situation which is not conducive to economic growth or investment returns. There is increasing evidence that this is affecting economic growth in both countries and around the world. Reflecting difficult economic circumstances, the US Federal Reserve cut key interest rates twice. This should help alleviate the recent strength of the US dollar, which has been a headwind for emerging markets, and reduce the cost of debt in some countries."
Lead Portfolio Manager Chetan Sehgal added: "Chinese stocks fell over the reporting period as investors focused on the US-China trade conflict and slowing growth in China. However, we believe that China's economy may be better able to absorb the trade issues than the market fears. It is important to note that China's growth is now less dependent on exports than it was a decade ago."
"South Korea was TEMIT's second-largest market position at the end of September and overweight versus the benchmark. The South Korean market started the period on a positive note on better-than-expected first-quarter earnings results and a change in the Bank of Korea's monetary policy guidance from a defensively hawkish to a more neutral monetary policy," Seghal continued.
The manager also noted the trust remained underweight in Taiwan and was overweight in Russia - which both aided the trust's total return compared to the benchmark.
Seghal added: "We believe that 2020 could be another strong year for earnings in emerging markets because, based on what we are seeing, a lot of cyclical recoveries have started to emerge, and they should fully materialise in 2020. These conditions, when paired with improving corporate governance that includes dividend pay-outs and buybacks, present an increasingly attractive long-term buying opportunity for investors and contribute to our optimism in the asset class."
Shares in Templeton Emerging Markets were 0.5% higher in London on Monday at 791.58 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Templeton Emerging Markets (TEM)