Roland Jones: Well, good morning, ladies and gentlemen, and welcome to the Schroder Oriental Income Fund plc Annual Results Webinar coming to you today from the Schroders' headquarters in the heart of the city of London. I'm Roland Jones. I'm responsible for the investment trust sales here at Schroders. And I'm pleased to be your host over the next 35 minutes or so. I'm also very pleased to be joined by your portfolio manager, Richard Sennitt. Good morning, Richard.
Richard Sennitt: Good morning, Roland. Good morning, everyone.
Roland Jones: Richard has got over 35 years' experience and has recently returned from...
Richard Sennitt: Not quite Roland.
Roland Jones: Okay.
Richard Sennitt: Over 30.
Roland Jones: Just returned from a trip to Australia. And over the next 35 minutes or so, we're going to talk about the performance of the trust over the results period, the positioning a little bit of outlook and our views for the region, but also very importantly, the importance of generating a dividend from a portfolio of Asian equity stocks. So we're going to spend a little bit of time over on that topic over the next 35 minutes. Now you will have plenty of time to ask questions. I have my iPad. Please fill them in, send them to me. You've also got the opportunity to download the annual results and today's presentation. So it's all there. There's also a survey at the end. We'll be very grateful if you could fill that in because that's really useful for us, so we can make sure that these presentations are sort of meeting your requirements in the future. So that's the agenda for today.
Roland Jones: Richard, tell us a little bit about the team that we have in Asia because that's very important, isn't it? Let's cover that.
Richard Sennitt: Yes. No, you're absolutely right. It is a key part of our investment process. And I think it's probably worth just touching on how we do manage the portfolio and the way that we approach investment in Asia because I think it is a really important part of the ability to deliver success over the long term. First of all, we think that markets are inefficient in Asia, which won't surprise you. And the best way to extract those inefficiencies is very much through a bottom-up fundamental process. And to that end, as Roland mentioned, we have a very extensive team based out in the region. Although I'm based here in London, you can see that we have a team based through 6 offices in Asia and 47 analysts. And they're going out visiting companies, writing reports, making recommendations, and I'm drawing on their best ideas from an income perspective to create a portfolio of roughly about sort of 60 names. I think it's probably what's worth highlighting is that what we don't do is screen the universe for the highest-yielding stocks and backfill the portfolio with those names. What we're looking to do is to buy into companies where there is most certainly an income rationale to go in the portfolio, but there is also hopefully upside to fair value as well. And that does mean that there are some areas of the market where we're probably going to have a little bit less exposure or not get exposure to. One of the most obvious areas that we are quite underweight in would be, for instance, the Chinese Internet platform companies would be an example of that. This does mean that, I guess, stylistically for the fund, there is -- given the characteristics of income and so on, it doesn't tend to mean that overall, we have a sort of a bit of a value bias to the portfolio. So that's really on the sort of the team and high-level process. And perhaps if I sort of give a bit of a recap about what's been going on in the markets because I guess this year has been a year when actually Asia has been a pretty good performer versus world markets. It's up over 20% year-to-date. And I suppose if you rewind 12 months ago, that may have been a bit of a surprise to people because if you think about it, we just were in that period when we're having Trump coming into being elected in the U.S., and he obviously had very clear views around tariffs, which obviously, it was going to have a big impact on Asia. And also, there was concern around the outlook for the Chinese economy. So looking at whether there was risk around a hard landing there. And I guess what we've seen since then has been that markets have got a bit more comfort around those things. So around enough is being done to sort of stabilize the Chinese economy. And I think also that some of the sort of initial talk around tariffs, I think people got more comfortable with some of the deals that are starting to come through on there, and that's allowed markets to do a bit better. The other thing, of course, which has been a real driver for markets globally has been around what's been going on with AI and obviously, Asia is very much an enabler for AI with its extensive sort of semiconductor companies and world-class names like TSMC, Samsung Electronics, these sorts of names. And they're obviously a part of that whole ecosystem, and that has been helpful for the markets. And then I'd say the final piece, which has sort of driven markets a bit higher has been a weaker U.S. dollar, which tends to be helpful for liquidity in the region and good for stock markets, at least historically. And with that, just looking at the chart that we've got here, you can just see that what each of the individual markets have done. And the reason that I put this chart up here is just to sort of show that actually most of the rise in markets is being driven by -- or has been driven by a re-rating rather than earnings growth necessarily being revised up or coming through. So this just breaks down the returns for each market and it says what proportion came from a re-rating, what came from earnings and the earnings being the green, the dark blue being the sort of re-rating. And you can see in most markets, it's been about a re-rating. And that's because the markets have been quite liquidity driven. They've been quite narrow. They've been quite thematic. And as we go through time, I'd expect to see a bit more of a broadening out from the sort of re-rating phase more to sort of earnings growth coming through. And this just sort of paints that picture a bit in a slightly different way. The chart on the left is just looking at the sort of the weight of the largest 5 stocks in the benchmark. And you can see that on the left-hand side, it's now over 25% of the market. So it's been quite a concentrated market rally, and that's been sort of a bit similar to what we've obviously seen in markets like the U.S. And the number of stocks that have been outperforming has come right down, which is the right-hand chart. So it's been quite narrow, and that's around that sort of thematic piece, which I was sort of talking to. And that's generally been not a great backdrop for income, I'd say, because it has been quite a bit more of a growth-focused rally and with growth outperforming value. So if we look at the sort of the performance of the trust over the sort of financial year, you can see that here, we've got -- so I think the first thing to point out is obviously that absolute returns have been pretty good over the year. And actually, if you look back through time, they've been relatively consistent. You can see they're generating roughly 10% per annum over the longer term. Against the index, the strategy has lagged the benchmark. And that has really been around a couple of things. Firstly, about the point about value has been a bit of a headwind in the market because growth has done better in what's been quite a liquidity-driven market. And some of the names which have done very well have been some of those Chinese Internet platform companies, so the likes of Tencent, which is hard to sort of own from a sort of -- with an income -- justify from an income rationale perspective. So that's been one of the sort of headwinds. That's partly offset by an overweight in the stock selection in sort of Hong Kong. And I'd say then from a sector perspective, sort of financials have been good for us, being overweight and stock selection within them and -- which has been partly offset by stock selection within IT. The other thing I should point out here is obviously that subsequent to that year-end, we have announced the full year dividend, and it's shown another increase there, and I'll talk a bit more about that in a second. If I bring it sort of a bit more up to date to the end of October, you can see that the markets have sort of continued to rally. And that has been driven again by very much a continuation of sort of strength in some of those AI names. And since the month end, there's been a bit of a sort of question mark around that, about the sort of the sustainability of the rally, but maybe we can talk about that a bit later. But generally, the market environment has obviously been positive for equities. And I think it's probably worth pointing out how if you're looking at this trust, how you should think about how the trust performs in different types of markets. So here, we just got the annual returns going back over the last 10 years and looking at -- and what I would tend to say is that when markets are sort of quite liquidity-driven or growth focused, that tends to be a bit of a headwind for relative performance, but you tend to do relatively well from an absolute sense. But when markets are falling or gently rising, there's a reasonable, hopefully, an opportunity to outperform versus the benchmark. And I think that's what you see over the sort of 10 calendar years that we've got here. The strategy has sort of underperformed in 3 of those years is 2017, 2019 and 2020. And they were years which were good from an absolute perspective. So you made good absolute returns but lagged the benchmark, and that's partly because they were focused on growth. Those markets, they tend to be quite growth-driven, quite liquidity driven. But in most other markets, you can see there, which are generally rising or falling, the trust has managed to outperform its benchmark. So that's sort of the way that you should sort of, I guess, think about that relative performance piece. And just talking a bit more, I suppose, just putting that piece, I mentioned that sort of higher-yielding stocks have basically had a bit of a challenge from a relative performance perspective. So this just looks at the relative performance by quartile of yield. And you can see -- so if you look at the right-hand side, any -- the bars above the line are stocks outperforming the benchmark. And you can see that the lowest yield quintiles, so Quintile 4 and Quintile 3 have performed well, whereas the highest-yielding quartile has been the sort of the weakest performing quartile. And that's coming back to what I was sort of describing earlier as to how you should expect. So high-yielding stocks have lagged the benchmark essentially. And then if we look at the sort of performance of the individual markets, and this is to the end of October, and it looks at the 12-month returns. I think it can almost be summed up in sort of in a relatively -- I mean, it's a bit of a generalization, but the areas that have done best over the last 12 months or so have been in those areas of sort of North Asia and around us sort of more of an AI focus. So if you look at sector returns, the best-performing sectors, information technology, I guess, not too much of a shock to many people. And then on the left, if you look at the country returns, the North Asian markets, in particular, Korea, Taiwan, China, all outperformed. And obviously, particularly Korea and Taiwan have that large semiconductor industry and that enabler of AI theme there. And then on the flip side, you've got the sort of, if you like, from a market perspective, those markets which have got relatively less in some of those more direct technology AI areas. So -- and perhaps a bit more impacted by what's been going on from a tariff perspective in some ways. So you're looking down at the sort of the -- some of the Southeast Asian markets, so like Thailand, Philippines, Indonesia, but also Australia, which, again, is another market where it hasn't got so much of that sort of IT exposure. And from a sector perspective, it's been the sectors that have lagged have been those which are sort of a bit more defensive, so utilities, consumer staples and health care and so on. So if you look at the sort of performance of the trust over the longer term, that -- and here, we've got the sort of light blue line, which is the sort of FTSE, the green line, which is the regional benchmark and the dark blue line, which is the trust, you can see over the long term, both the region and the trust have outperformed the U.K. market. So it has sort of, if you like, fulfilled a sort of diversification away from the U.K., if you like. So for someone who's got a lot of U.K. income, this is sort of potentially you could diversify through this and over the longer term, there are periods obviously when it doesn't outperform the U.K., but long term, it has outperformed. And I think the other thing just to sort of highlight is that the trust has outperformed the benchmark over the longer term. And I think that's a sort of -- is an argument, particularly when you're investing in Asia for sort of active fund management. And I think those sort of inefficiencies within the market that you can hopefully, over the long term, exploit to an extent. So if we look at the sort of the dividend per share over time, as I mentioned that's another increase this year in the dividend, and that's the latest in the line of increases, which have been going on now consistently every year since launch. And I think it's probably worth saying that in a sense, the trust is a bit plain vanilla in the way that it generates its income. It's not obviously paying out of capital. It's paying out of the income that's come through from the companies that we've owned through time. And it's also not trying to generate income through writing options or additional strategies. So in that sense, it's quite sort of, I guess, simple in its approach to the underlying income. And that does mean that you get that sort of value tilt to the portfolio.
Roland Jones: So Richard, does that mean that every stock that you own in the portfolio is a yielding stock? And are you drawn towards those high yielders?
Richard Sennitt: There has to be an income rationale for the stock to go into the portfolio, but it doesn't necessarily have to have a high yield today or it could indeed even not be paying a dividend today. But I have to see a clear progression to a decent dividend being paid out in the sort of forecastable future, if you like, rather than necessarily say, 10, 20 years down the line. So there is definitely an income rationale, but there is the ability to buy into companies where I think there's going to be an increase in dividend, which is material coming through over the forecastable future. So yes, it's -- so that you don't have to have a dividend, but in general, the very large majority do.
Roland Jones: And are you naturally wary of those stocks paying a high dividend because that may not be sustainable? I presume the sustainability of dividend is an important factor as well.
Richard Sennitt: Yes, sustainability is important, and we obviously consider that when we're looking at individual stocks. And I think it goes back to that point I made at the beginning where we don't just screen for the highest-yielding stocks because often some of those stocks can be ones where you do see dividend cuts because perhaps they're paying out more than they should. And we also want to buy into companies where there is potentially hopefully some sort of growth in the medium to long term and that potentially is a bit of upside to capital. So yes, we do focus on that point. It doesn't mean that we can always avoid dividend cuts, but it's obviously a consideration when we put stocks into the portfolio.
Roland Jones: That's good. Thank you for clarifying that.
Richard Sennitt: And I suppose this -- just to give a bit of context around where yields in the region are today. If you look at the left-hand chart, this just shows the dividend yield for the different regions. And then you can see the yield of Asia and the yield of the trust. And I guess if you look at the region, the yield is -- it's higher than the U.S. It's a bit higher than Japan, not as much as in the U.K. But if you look on the right-hand side there, you see that the trust does yield a premium, obviously, to the region, as you'd expect. And at the moment, it is a little bit above that, the yield of the U.K. market. And then the chart on the right, I guess, is instructive of sort of where relative yields are versus history versus the sort of different regions. So this just looks at the, if you like, the dividend yield premium of Asia versus the rest of the world, and you see it's relatively high at the moment versus its long-term history. So in that sense, relative to other markets, it doesn't look particularly extended at the moment. And then I guess, just to finish off with you on some of the drivers of income at the moment. On the left is just sort of consensus numbers for dividend growth at the moment, which coming through -- sorry, a lot of sort of small bars there, probably not very clear. But I guess the bottom line is that we're sort of -- we are getting dividend growth forecast to come through this year, sort of that mid-single-digit range of growth. It does vary between sectors. And then on the right, the other sort of influence of dividends, obviously around currency. So particularly the strength of sterling versus the regional markets. And obviously, if sterling is strong, that tends to act as a bit of a headwind for the translation of dividends back into sterling and vice versa. And over the last few years, actually, it's been a bit of a headwind at work. Very recently, it sort of just started to come off a little bit from currency. So if we see that continue, that would be favorable, but it has been a headwind, broadly speaking, over the last couple of years. And then to your point about sort of resilience of dividends. And I think one of the reasons that sort of Asia is sort of interesting or is, in my view, relatively reliable source of income is that it's not particularly extended from a sort of payout perspective. So the proportion of company's earnings that are being paid out is not that high. So if you look at the left-hand chart, you can see that green line, which is the payout ratio for the region, and that's sort of 30 -- it sort of goes in that sort of 30% to 40% range. So quite a big cushion if sort of earnings could come under pressure. And then on the right, gearing also for the region, and this just looks at the listed sector gearing versus other regions. And you can see that the Asian region, which is that light blue line is relatively low versus the other regions. So again, another sort of reason why you might get some sort of resilience there if things did slow down. So if I talk a bit more now about sort of, I guess, outlook and positioning and where we sort of have exposure within the fund and the outlook. I guess, first of all, here, what do we like in the region? I guess this slide is a reminder of some of the key themes as stocks that investors in the trust can get exposure to. We've got obviously some of the global leaders in tech, so things that we mentioned sort of TSMC and Samsung Electronics, but also -- and they're obviously benefiting from that structural AI growth theme. But we've also got some of the world's best manufacturers in Asia unsurprisingly. So you've got things like Shenzhou, which is focused largely around sort of sports apparel, that sort of thing. Hon Hai, which obviously does a lot of the manufacturing of -- increasingly of high-end servers for AI, but also people probably know it for a lot of the Apple product that it does. And then a good exposure elsewhere to some of the sort of domestic growth trends as well. And we look through sort of financials, so banks, insurance companies and some of the other names there. And if you look at the trust sort of positioning that we stand at the moment, I think the thing -- we haven't made any big shifts over the recent period. But I suppose the thing that stands out and continues to stand out would be that we remain very underweight China. That's partly offset by the overweight to Hong Kong that we have. And that -- part of that is around this point around some of the Internet platform companies that don't really pay much in the way of dividends. But -- and I'll talk a bit more about China and the outlook in a second. But we continue to like Singapore, although that size of that overweight, we have sort of brought down a little bit. And the other area, I'd say we have taken money out of over the course of the last 12 months or so or whatever has been in Korea, where we're now underweight. And that's partly a reflection of the market has done really well. It's re-rated up. And part of that re-rating up has been on the sort of value-up program, which you probably heard people talking about, which is sort of trying to focus a bit more on shareholder returns and improving sort of -- generally sort of improving corporate governance in different areas. So...
Roland Jones: Are we seeing evidence of that's of working?
Richard Sennitt: We're starting to see some of that coming through. But yes, I wouldn't say it's by any means universal at the moment. So -- and that's hence why one of the areas I've been taking a bit of money out of because stocks have moved up in anticipation of this happening. And yes, we have seen some things, particularly in some of the sort of -- actually in some of the financial sector, we've seen improvement in dividend payouts and such like. So that has been coming through. But we're now in a phase where a bit more of the sort of things that need to happen are a bit more tied into sort of changes in legislation and so on that need to come through, which take time. And hopefully, over the longer term, we will do, but there is some expectation that they will in prices at the moment in my view. And then I guess on sectors, again, we remain, I guess, overweight in sort of real estate and financials and IT but I would say that we have taken down the weight over the course of the last 12 months in financials and IT. IT has obviously done pretty well as an area, as we've described. So there, it's been a bit about relative value and taking money out for that reason. Financials, again, it's been a good performing area of the market. And we still like financials, but just some of the things which have done well, we've sort of taken money out of. And then I suppose on the underweight, consumer discretionary remains a big underweight, partly again, that's partly around sort of Chinese e-commerce companies and so on. And I guess we've been adding to some of the sort of sectors such as utilities and some of the sectors that have lagged a bit into staples.
Roland Jones: So that's where the proceeds from some of the gains we made on the IT, financials and real estate are going into those particular sectors.
Richard Sennitt: Yes, being recycled.
Roland Jones: Yes. Right.
Richard Sennitt: And actually, we did put some money into consumer discretionary. So we were more underweight there, but there have been some opportunities in places like China to increase our exposure.
Roland Jones: That's a bit of active management.
Richard Sennitt: Yes. And then just the top 10 holdings, and I guess I'm not going to go through these names, but just in the sense of reasonably diversified both by country and by sector. And I think it is worth just sort of from an overall standpoint, just commenting on how the sector or the region is quite heterogeneous. It's not just about China or exports or whatever. Within the trust, you do get exposure to a broad set of drivers. And so obviously, we get the exposure that I sort of described in North Asia to some of these exporters and tech companies, that's Korea, Taiwan, and that makes up just over 1/3 of the portfolio. That's, I guess, driven more by what's going on globally in the export cycle as well as obviously structurally in AI. And then obviously, we've got sort of about 30% of the portfolio in China and Hong Kong, where we'd say that still has some of the challenges, which we know about around demographics, overinvestment and so on. And so we as we sort of mentioned earlier, we are quite underweight versus the reference benchmark. But as an active manager, we can still find things that we want to buy in there. And then I guess the other 2 chunks are sort of ASEAN, which has got a large portion of which, I guess, or the bigger overweight comes from our position in Singapore, which has increasingly benefited from its increased importance as a financial center within the region and also acting as a sort of increasingly into the region outside of its hinterland, et cetera. So some of the smaller ASEAN markets, Indonesia, Philippines, Thailand, Vietnam, all those markets which are, to an extent, benefiting in a sense from the sort of supply chain diversification, which we've seen coming out of from corporates that have been very focused on producing in China, and they want to have alternative sources of production. So that's sort of whole China Plus One theme. And then Australia, which again, is -- you don't think of necessarily as the highest growth market, but is a market where shareholder returns have generally been pretty reasonable through time and again, acts as a good sort of diversifier there.
Roland Jones: And you've just come up from Australia, haven't you? Any particular insights that's worth sharing at this point? Or will you come to those?
Richard Sennitt: Well, I come to those. I mean, yes, because I guess Australia is a market, as I was sort of saying, it's not -- you don't think of it as a sort of a high-growth Asian market in the sort of traditional sense. So you sort of perhaps think how does that fit within sort of an Asia portfolio or whatever. But it obviously benefits from growth that is going on across Asia as a whole from an economic standpoint. So what's going on, obviously, with its large commodity sector and so on. And also, the other point is that actually, you think of the sort of demographics, you don't necessarily think of a sort of Australia as being at the forefront of that, but actually because they're growing their population pretty rapidly, the demographic profile is also pretty good for Australia as well.
Roland Jones: Which is not the same for other.
Richard Sennitt: Yes, for some of the other Asian countries, it's working the opposite way where the populations are obviously getting older and the sort of fertility rate has dropped a bit. So in some of those North Asian markets.
Roland Jones: Interesting. Okay.
Richard Sennitt: I guess quickly on time because I realize I've been talking quite a long time, but I'll swiftly move through these last slides. I mean, on China, our sort of general position in the sense of the way that we're viewing the market hasn't really shifted that much. And this is a slide I would have used last year, obviously updated. But I think it does tell you what's generally been going on, which you look at consumer confidence at the moment in China, it still remains pretty low, hasn't improved much. So the domestic economy in China, despite the sort of stimulus measures that have come through have not actually seen the economy pick up particularly strongly from a domestic standpoint. Exports has been pretty good. That's helped the economy overall. And instead, people instead of choosing to sort of invest in property, which has obviously been a pretty weak area, they've been saving and increasing their savings, which is that middle chart. And that has seen sort of -- that's a plus and a negative, I guess, in the sense that, obviously, if they're saving more, they're not spending. But I guess if they can sort of get things right and people spending, there's obviously an opportunity for consumers to draw down on those savings to spend more when confidence improves. And on the right-hand chart, it just shows how interest rates haven't actually started to see a pickup in household borrowing. So that mechanism hasn't yet sort of flown through into the economy. And then the other -- so we remain underweight in China, but the other area, of course, where is sort of an area of debate...
Roland Jones: Very topical.
Richard Sennitt: Yes, is obviously within IT and AI in particular. And I think we're all sort of familiar with the chart on the left, which is sort of U.S. hyperscaler CapEx. It's obviously been exceptionally strong. And as a proportion of sales, it's sort of up there now at sort of around 20%. So that's grown very rapidly, and that's sort of been driving, obviously, related names in semiconductors and so on, both in Asia and elsewhere, which is the right-hand part of the chart. And near-term growth continues to look very good. The question mark is more about are we nearing that peak now. And the real question mark is all this investment is how much return are we going to generate on that investment. And that's where the sort of the big question still remains. So we are less overweight in IT than we would have been sort of 12 months ago. So we've been gradually bringing our exposure down just really to reflect that sort of how well these things have done over the course of the last 12 months. And the other area, which I mentioned, which we continue to like is sort of financials. We're a bit less overweight than we were. Again, it's sort of not just banks, it's also insurance companies, exchange companies. Penetration of insurance products, which is on the left, is still very low versus sort of developed markets. And so there's an opportunity longer term for that to grow through time. So we quite like that. And then on the right-hand side, you just look at sort of some of the returns coming out of banks. The ROEs are reasonably good in these markets. and the yields are good as well. And although rates have come down or come down a bit, and that will have an impact on margins, as rates come down, it has a flow-through on obviously, credit cost, but also on just demand for loans as well. So you hopefully get some offset coming through from there. And then I mentioned the point about the U.S. dollar earlier, and that's the central chart here or this chart here. And you can just see the green line, which is the U.S. dollar index. So as it goes up, the U.S. dollar is strengthening, as it comes down, it's weakening. And you can see that it moves sort of inversely to the index, which is the -- which is a dark blue line, and you can see that particularly clearly in the sort of '90s and early 2000s. But -- and more recently, you can see, obviously, the market has gone up and the U.S. dollar has weakened. So there is a correlation there. If we continue to see U.S. dollar weakness, that could act as a bit of a tailwind if history is a guide.
Roland Jones: And Richard, actually, we've had a question on the dollar weakness. And obviously, you've very well -- you've sort of explained the relationship between the dollar and Asian equities. But the question actually relates to does a weaker dollar -- is there any evidence to suggest that either an income strategy or a more value-orientated strategy benefits more from a weaker dollar? Is there any evidence to that to support that fact?
Richard Sennitt: Yes, I'm not sure that there's necessarily evidence to support that direct link. I guess the way that the sort of transmission mechanism works, I think if you look at it as the U.S. dollar weakens, it tends to ease liquidity in the region itself, and that allows interest rates in Asia, the central banks can start to sort of ease rates, and that helps from a sort of economic standpoint to generate growth. So you could argue, I guess, that it should be better for the domestic economy in a relative sense perhaps vis-a-vis some of the more export-orientated areas just because rate cuts should benefit domestic growth to an extent. And obviously, some of the sectors which have got good yield are attractive at the moment, things like financials, which I mentioned, obviously are driven by the strength of the domestic sector. So there's a sort of a bit of a link there. And then just the final piece is just on -- quickly on valuations. And I should say, given the rallies that we've seen in the market and what I was saying about it's been more about re-rating up than sort of earnings necessarily coming through strongly at this stage. The chart on the left just shows the sort of PE of the region versus its history, and you can see that it's now above the long-term average. So not particularly cheap markets versus the longer-term averages, but versus developed markets, which is on the right, which just shows the sort of ratio of PE for the region versus developed markets, you can still see that on that basis, Asia still looks relatively attractive versus history. And then when you sort of dive down and get a bit more granular looking at the different markets, you can see that here, which is the sort of just looks the little blue diamond -- light blue diamond is the valuation -- current valuation of the market against its range. And you can see that for most markets, they're sort of above their longer-term averages. And you can also see that there's a big spread across markets. So again, I think one of the key things to take away is that, again, from a sort of an active strategy, you can take advantage of those relative differences in valuation, which are there from a market level. But also when you look and drill down at the individual stocks in those markets, there's -- they're not all at the same price. So you can find -- again, you can find good opportunities. And to that point, the sort of -- again, the left-hand chart is just that repeat of that sort of stocks outperforming, the index come down. So it's been a narrow rally. That means outside of that, there's stocks that potentially you can find. And if you look at income stocks, which is the right-hand chart here, so this just looks at the top 2 quintiles of yield, so the top 40% of stocks by dividend yield and how they're valued relative to the market. And you can see that, that discount that's there, so it's around about sort of a 25% discount at the moment, roughly speaking, from the chart is not extended versus history. So from a sort of, again, dividend names don't look particularly extended versus the market in my view. And that is the sort of -- I won't take you through all the slides there, but that's the conclusion of the presentation.
Roland Jones: Well, that's great because actually very comprehensive. We've got a little bit of time left for a few of the questions that come through. We have some really good questions actually. We -- interesting, one of our listeners has asked about, is it now time to consider inviting Japan back into the fold into an Asian -- a pan-Asian trust, particularly one where one is generating a dividend and the valuations for, say, the Japanese market are looking a little bit more palatable compared to where they were 20 years ago. Any thoughts on that?
Richard Sennitt: Yes. And I think that certainly has merit. I mean we have historically invested in Japan to a lesser or a greater degree for the trust. I mean it's never been a significant weighting, but...
Roland Jones: The trust is allowed to get Japanese exposure...
Richard Sennitt: Yes. So we have one name at the moment in Japan. It's certainly a small exposure. But -- so there is opportunities over time. And -- but yes, at the moment, it's relatively small.
Roland Jones: That's good, okay. And we've had another -- quite a few questions about valuations, particularly related to the AI bubble in Asia. And I think we've sort of covered quite a bit of that. But I'm just interested to hear, how has the trust performed in the very short term? I know we don't focus on the short term. It's the medium, long term and it's important. But has there been a degree of resilience with the trust given some of the profit taking you took out of the technology stocks recently?
Richard Sennitt: Yes. I mean...
Roland Jones: Great timing, by the way. Yes.
Richard Sennitt: Well, yes. No, I mean, obviously, there have been those market -- those stocks have done well. And there has been definitely over the last few weeks, there's definitely been an increase in volatility around those names as I guess people have become a bit more nervous about valuations and I think the whole idea of what is the return of all this investment going to be, where are we going to get those use cases. And that has seen a bit more volatility. And from a relative perspective, I think since the end -- I mean, in the very short term since the end of the month, I think the trust is up in a relative sense against the benchmark about 2% or so. And so it's broadly flat against the market, which is sort of a little bit down a couple of percent or so.
Roland Jones: And we've always positioned the trust and not only been able to generate a very decent income from Asian portfolios, but also quite a good way of getting a lower risk, slightly more conservative way to approach the Asian market.
Richard Sennitt: Yes. I mean the set of stocks generally tends to have -- if you took those stocks and looked at them individually against the market as a whole, they tend to be lower volatility in aggregate. And that through time is a bit why you get the sort of when the market is rallying hard, they tends to lag a bit. So it's a bit low beta and vice versa.
Roland Jones: Understood. Okay. We just have time for perhaps one more question. We've got a question about -- relating to the comments you made on the ASEAN region and talking about the very diverse nature of the Asian market, but specifically about the Philippines, where we've got a little bit of an overweight. What's the rationale there? What do you particularly like about the Philippines? I presume it's a stock more than a sector -- sorry, a stock more than a country related, but please tell us.
Richard Sennitt: Yes. I mean there, it's a holding which we've had for a while, which is has done reasonably well, which is -- it's actually ICTSI, which is a port operator. And it's not just a sort of a domestic Filipino story, although that's actually an important segment of its earnings. It's also sort of an emerging growth proxy in the sense of it has a lot of exposure to emerging market ports globally. And so as trade flows within that emerging market piece grow over time, hopefully, the company should benefit from that. The Philippines is an interesting market because at the moment, it's one of the markets that's really sort of, I guess, lagged to put it nicely, I suppose, lagged the region. And the region is one of the markets which is trading at a significant at a discount to its sort of historic longer-term range. So it's definitely becoming more interesting. I guess interest rates clearly an easing of interest rates clearly globally help the Philippines perhaps more than some of the other markets given the external finances and so on. But I should say that as that potentially becomes a bit more attractive, it's also not the most liquid market in the world, and it's quite volatile. So it's never going to be a really huge portion of the portfolio from that perspective.
Roland Jones: Okay. Well, thank you. Useful. Well, ladies and gentlemen, we're sort of fast approaching quarter to 10:00. Thank you all very much for listening in today and for all of your questions. Richard, very comprehensive overview of the region, which -- looking at your summary slides, I mean, despite having some concerns about China and some of the technology stocks, there is a lot more to Asia than just those 2 sectors, a very diverse area. We talked about the interesting opportunities in Australia, in ASEAN, in Korea. The trust after 20 years still remains a great way of generating a growing dividend from a basket of Asian portfolios. And we're on track to, I hope, attain the dividend hero status showing a 20-year unbroken rise of dividend over the next -- over the last 20 years. So one more year to go. But ladies and gentlemen, thanks once again for all your questions. Please do the survey. The feedback form is really important for us. It just helps us tailor these types of presentations for the future to make sure that we continue to hit the mark. Please send that into us. Have a great rest of the day. Thanks very much. Good morning.