Asian Income Trust - January 2012 update

The Asian markets started December very strongly following the first indications of monetary easing in China but then fell back as Europe continued to wrestle with its ongoing problems. By the end of the month, however, more encouraging economic news from the US and a recovery of the Australian dollar ensured the index finished the month up 1% in sterling terms.
Within the region, South East Asian markets continued to rise whereas India, Singapore, South Korea and Australia fell. South Korea was hurt by worries over the security implications of leadership succession in the North, following the death of Kim Jong Il, and Australia was impacted by further domestic economic weakness visible through further profit warnings from some retailers. The Australian central bank reacted to this weakness with a second interest rate cut, bringing their overnight rate to 4.25%.

Within this environment the Trust benefited from the positions in the Chinese and Australian banks which rose, as well as defensive holdings in Taiwan. During the month the Far Eastone Telecom position in Taiwan was further reduced following its strong performance with the funds being reinvested into other defensive holdings including PT Telekomunikasi in Indonesia and Thai Beverage, the brewer and distiller, listed in Singapore. This latter company remains very strong in its spirits business, is actively attempting to improve margins in its beer operations and is forecast to pay a dividend yield of almost 7% this year.

During December, the Trust also paid its inaugural quarterly dividend following the change from semi-annual payments at the end of its financial year in September.