asia

HFEL: Asia Pacific profits prove resilient during Covid-19 recession


The UK was the hardest hit, with pre-tax profits down by 81%, while Europe also saw a significant impact. The US and Canada were less badly affected, and Japan saw a negligible effect.

HFEL analysed the 2010 to 2020 annual financial results of 2,046 companies. It excluded any company without all 11 years of financial history, which left 1,717 companies, of which 763 were in Asia Pacific ex-Japan and 954 in the rest of the world.

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Mike Kerley, fund manager of the £522.8m Henderson Far East Income said: “The global decline in profits in 2020 was remarkably small given the severity of the Covid-19 recession but Asia Pacific ex-Japan notably stands out from the rest of the world.”

In China, companies of which account for more than half of Asia Pacific ex-Japan, earnings rose in 2020, with a similar positive result in South Korea and Taiwan.

Kerley said he also expects dividends to rebound as the region is “increasingly becoming a dividend powerhouse”.

In 2020 dividends in Asia Pacific ex-Japan fell 5.6%, compared to 9.3% fall in the rest of the world. This was significantly less than predicted by HFEL’s 2020 Asia Pacific Dividend index, which anticipated a 17% decline in the best-case scenario.

The 14 largest dividend increases last year were all in China, where dividend payouts rose by 9.6% for the year.

HFEL expects the region’s dividends to rise by 12% to 14% this year.

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The trust is currently trading at a slight premium of 0.6%. Its share price has underperformed the Asia Pacific Equity Income AIC sector across one, three, five and ten years, according to data from the AIC.

In five years it returned 54.5% compared to 90.9% for the AIC sector.



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