Asia Pacific Sustainability


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Strategy overview

The strategy was launched in December 2005 and invests in companies in the Asia Pacific region (excluding Japan, including Australia and New Zealand), which are positioned to benefit from and contribute to sustainable development. 

 

Strategy update

1 April - 30 June 2021

Our investment philosophy marries sustainability with quality.

We are most attracted to companies which occupy the intersection of both of these elements. We will not invest in a company for reasons of sustainability only. Nor will we invest in high-quality companies that are positioned poorly from a sustainability perspective. We evaluate quality across three broad measures: stewardship, franchise and financials.

During the period we sold the very marginal investment in Indigo Paints due to valuations reaching extreme levels post a much anticipated initial public offering (IPO). For reasons of valuation we also trimmed holdings in Dr. Lal PathLabs (India), Cyient (India) and Xero (Australia). We reduced Tokyo Electron Limited for reasons of cyclicality, sustainability and valuation. Fortunately, we had an opportunity to top up a number of existing holdings listed in New Zealand, Australia, Japan, India and Hong Kong for company specific attractions.

The Australian market is often dubbed ‘a commodity market’ because of the high number of successful resource companies listed on the Australian Stock Exchange. These companies, combined with a very dominant banking sector, frequently crowd out investor attention from some of the high- quality innovative business models that are also listed in Australia. During the period we concluded our evaluation of a founder-managed technology business that boasts 20% market share in the software design of printed circuit boards. We believe that this asset, and people-light business offers attractive financial characteristics, excellent stewardship and a powerful franchise that is capable of continuing to win market share from less focused peers. We added the company to the portfolio.

We increased the direct exposure to companies listed in China as we bought two new mainland A-Share companies, taking the number of Chinese listed businesses in the strategy to seven.

During the period we bought a founder-managed diagnostics business which stands distinct from government interference and assists patients with the early diagnosis of cancer. We also invested in an innovative, founder-managed, vertically-integrated, industrial automation business that improves manufacturing productivity, therefore benefiting from strong sustainability tailwinds and aligned with government ambition for national development.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of each strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results. 

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Proxy voting

1 April - 30 June 2021

Asia Pacific Sustainability

During the quarter there were 274 resolutions from 26 companies to vote on. On behalf of clients, we voted against 11 resolutions.

We voted against Pentamaster International, Vinda International and AK Medical Holdings’ request to repurchase issued shares, and issue shares without pre-emptive rights, as the share discount rate had not been disclosed and the share issuance was excessive. (six resolutions)

We voted against Shenzhen Inovance Tech’s request to adopt a long-term stock ownership incentive plan as there was a lack of disclosure and transparency on the plan. We also voted against their request to elect an individual to their Supervisory Council as we do not believe they are truly independent. (four resolutions)

We voted against Selamat Sempurna’s request to appoint an independent auditor and their authority to set the auditor fees. At the time of voting the company had not disclosed its proposed auditor. (one resolution)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Proxy voting chart numbers may not add to 100 due to rounding. 

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Investment terms 

View our list of investment terms to help you understand the terminology within this document.

Important information

This information has been prepared and issued by First Sentier Investors (Australia) IM Limited (ABN 89 114 194 311 AFSL 289017) (FSI AIM).

Stewart Investors is a trading name of FSI AIM. FSI AIM forms part of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc (MUFG), a global financial group.

It is directed at persons who are professional, sophisticated or wholesale clients and has not been prepared for and is not intended for persons who are retail clients. A copy of the Financial Services Guide for FSI AIM is available from First Sentier Investors on its website. This material contains general information only. It is not intended to provide you with financial product advice and does not take into account your objectives, financial situation or needs. Before making an investment decision, you should consider, with a financial adviser, whether this information is appropriate in light of your investment needs, objectives and financial situation.

MUFG and its subsidiaries do not guarantee the performance of any financial products mentioned or the repayment of capital in relation to any financial products mentioned. Investments in any investment-type financial products mentioned are not deposits or other liabilities of MUFG or its subsidiaries, and investment-type products are subject to investment risk including loss of income and capital invested.

To the extent permitted by law, no liability is accepted by FSI AIM, MUFG or any affiliates thereof for any loss or damage as a result of any reliance on this information. This information is, or is based upon, information that we believe to be accurate and reliable, however neither FSI AIM, MUFG nor any affiliates thereof offer any warranty that it contains no factual errors. No part of this material may be reproduced or transmitted in any form or by any means without the prior written consent of FSI AIM.

Some of the information has been compiled using data from representative accounts. This information relates to existing Stewart Investors strategies and has been provided to illustrate Stewart Investors’ expertise in the strategies. This material is provided for information purposes only and does not constitute a recommendation, a solicitation, an offer, an advice or an invitation to purchase or sell any fund and should in no case be interpreted as such.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell. Reference to the names of any company is merely to explain the investment strategy and should not be construed as investment advice or a recommendation to invest in any of those companies.