Asia Dragon Trust PLC

An update from our investment manager, Pruksa Iamthongthong - 29 April 2022

We expect continued volatility and uncertainty in the capital markets, until we see some resolution of the Russia-Ukraine crisis. In addition, investors will continue to focus on the pace of monetary policy normalisation, the challenges facing China and Covid-19. However, striking a more positive note, we would point out that trade and banking linkages with Russia and Ukraine are relatively limited and inflation is still mostly benign across Asia and is not constraining policymakers in their ability to support their economies. Meanwhile economic growth and earnings growth is still holding up reasonably well with markets such as India and the Philippines still on course to deliver healthy double-digit earnings growth this year. Moreover, although Covid-19 remains a risk, most of the region is moving towards living with the virus. Given the challenges facing Asia right now, this time is when an active approach to investing makes a difference enabling investors to sidestep parts of the market that are most exposed to risks and uncertainties. ESG is a key part of this active investment approach, particularly when it comes to assessing regulatory risk. We think a quality-focused investment approach – one that will help provide a buffer against rising volatility – is even more important in such times and we favour well-run quality companies with pricing power and ability to pass through cost pressures and weather the difficult conditions.