The objective of the trust is to provide income and obtain capital growth,in the countries of the Far East and Australasia,excluding Japan.
Asia Pacific equities were down sharply this quarter, with the MSCI Asia Pacific ex-Japan index declining 13.6% Given the increase in risk aversion within the region, it is perhaps unsurprising that the more expensive markets, such as India and China, were the weakest performers, falling 26.9% and 23.6% respectively over the quarter.India suffered on the back of the increase in short term capital gains tax and the indirect hike of securities transaction tax announced by the government in its 2008 budget. Taiwan was the strongest market this quarter, rising 5.5%. In Asia-Pacific, worries have not just concentrated on the US and credit problems, but on inflation as well.Inflation has generally risen because failures of crops, diversion of food crops into fuel products, population growth and increased consumption of wheat and animal products.At Mondrian, all our dividend discount models are done in real terms i.e. inflation is forecast for each market and is taken away from the growth of dividends. Consequently, a rise in inflation is factored into our models and is part of the valuation of each stock.