There were some pockets of strength, notably China where positive economic newsflow benefited share prices. The disappointing performance of the portfolio over the month could be ascribed largely to its holdings in Turkey. Relative performance also suffered as a result of an absence of any exposure to the outperforming Korean stockmarket, with companies here traditionally poor dividend payers. The Turkish companies held within the portfolio were sharply lower even though they should in theory benefit from a weaker currency given significant foreign earnings. Airports operator TAV was down 13%, white goods manufacturer Arcelik was 24% lower, whilst car manufacturer and distributor Tofas was off 22%. All can be expected to recover as markets become less indiscriminate. It was however encouraging that several portfolio holdings in Asia added value following positive results announcements and other newsflow. These included the Taiwanese computer, communications and consumer products group Synnex Technology, which put on 25% on the back of better than expected results for the second quarter. Net income was 58% higher on the year thanks to an improved product mix supporting higher margins, alongside foreign exchange gains. Bucking the weaker trend evident in Mumbai, NMDC, the low-cost Indian iron ore miner, reported better than expected results for the second consecutive quarter with net profit up 7% on the quarter, beating expectations and helping to send its share price up 12%.
A new holding in the Taiwanese engineering group CTCI has been added to the portfolio, with a position built up following some share price weakness in the wake of weaker than expected first half results on a slower order flow. New contract wins have however already been secured and, with operations around the globe, CTCI is well-placed to benefit from economic recovery. Its shares are also supported by a current dividend yield of around 6%.
Magna Emerging Markets Dividend
