Aberdeen proposes Japan-only mandate for its Asia investment arm

Japanese womenThe board of the Aberdeen All Asia Investment Trust is seeking shareholder approval to change the trust's mandate to invest only in Japan and to raise new capital by issuing conversion shares.

It plans to raise new capital by issuing up to £100 million (€118.8 million) of conversion shares, commonly referred to as C shares, at an issue price of 100p per share.

C shares allow trusts to raise new funds without penalising the interests of existing shareholders and the money is kept separate from the main assets. Once the new money has been raised and invested, C shares convert to ordinary shares.

Aiming to make the trust more attractive to a wider range of investors, the board is seeking permission from shareholders to change the investment policy to a Japan-only mandate. If approved, the trust will be renamed into Aberdeen Japan Investment Trust. 

The board says that although investment opportunities in Japan are good, performance in sterling terms “may be subject periodically to significant fluctuations because of changes in the value of the yen”.

However, the proposed new investment policy would provide tools to hedge yen net exposure in sterling terms.

Since the start of the year, Japanese prime minister Shinzo Abe has started to implement drastic measures to pull Japan out of deflation.

His policy, dubbed Abenomics, consists of “three arrows”: aggressive monetary easing, fiscal stimulus and supporting measures to boost economic growth.

Chern-Yeh Kwok, head of Japanese equities at Aberdeen Asset Management, adds: “Whilst the region is not without uncertainty, Japan should offer shareholders the potential for significant returns in the medium- to long-term.”

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