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Prices & Quotes - UK Markets - Schroder Oriental Income Fund Ltd. (SOI)

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Share Price:
Down 234.00p
Change Today:
-4.00p
Market Cap:
£631.41m
Sector:
Equity Investment Instruments

Interview: Managers see value in Far East

Date: Monday 26 Jan 2009

Recent profit warnings from Samsung and Sony, two of the Far East’s corporate giants, highlight the global nature of the current recession, but prospects for a recovery may be better than in the West, according to two fund managers.

Matthew Brett, the manager of Baillie Gifford’s Japanese Specialist Equities fund, concedes that all the data points are very negative in Japan at present, with the strong yen proving a major handicap for exporters.

“The economic uncertainty has affected Japan. The various (tankan) surveys and inventory figures paint a negative picture for the short term. Strong yen is bad for corporate profits,” he says.

But the rising yen has some benefits. “Much of the Japanese economy is still locally based, so a high yen also helps to reduce costs, while also being helpful to sterling based investors,” he adds.

Brett also points out that unlike in the UK and US, the banking system in Japan is still functional, with banks lending to corporate customers. Japanese companies and consumers have no net debt while a third of all Tokyo-listed firms bought back shares last year.

Valuations of companies in Japan are also historically low, he says. The majority of the market is trading below book value, while on cyclical valuations share prices in Japan are now as low as they have been since the seventies.

“There are plenty of opportunities to invest in good quality companies that have growth prospects,” he says. Yields on Japanese companies are also attractive given that Japanese firms traditionally have low payout ratios and a culture of not cutting the dividend.

Matthew Dobbs, who manages the Schroder Asia Pacific Fund/Schroder Oriental Income funds, thinks that Asian markets may have bottomed last October though he does not expect them to spark a general global recovery.

“Asian markets will not immediately take up the mantle from the West. Asia has been badly affected by the credit crisis even though it doesn’t have the same banking problems as the UK and US,” he says.

One reason why Asia is better placed is that it went through a similar crisis ten years ago, when Korea contracted by 15% in 10 months. Banks are also responding more willingly to government efforts to offset the worst of the downturn, In China, for example, banks have been told to lend and are lending, he adds.

There is still some scope for earnings shocks, but Dobbs says that stock market valuations are now in line with the problems.

Dobbs is concerned about possible trade protection raising its head again, but still sees potential longer term.

“It won’t be easy the first half for Asia. But the long term position of Asia will be good,” he believes.

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SOI Market Data

Currency UK Pounds
Price 234.00p
Change Today -4.00p
52 Week High 274.00p
52 Week Low 234.00p
Volume 497,938
Shares Issued 269.83m
Market Cap £631.41m

Performance Indicators

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SOI Dividends

  Latest Previous
  1st Interim 4th Interim
Ex-Div 30-Jan-20 07-Nov-19
Paid 14-Feb-20 29-Nov-19
Amount 1.90p 4.60p

Trades for 25-Feb-2020

Time Volume / Share Price
17:09 5,000 @ 234.00p
16:35 7,399 @ 234.00p
16:29 2,630 @ 236.00p
16:29 20 @ 237.00p
16:29 22 @ 237.00p

SOI Key Personnel