Invesco Asia Trust - Patiently waiting for re-rating of Chinese equities

Invesco Asia Trust (IAT) posted a one-year NAV total return (TR) to end-May 2024 of 3.8%, below its benchmark return of 8.7%, as some of IAT’s Chinese stock picks de-rated significantly over the period. That said, IAT’s managers remain confident in their current Chinese holdings (and the trust’s overweight position to China/Hong Kong), as they believe that the widespread weakness in local equities has allowed them to build a portfolio of high-quality names at attractive valuations. IAT also remains overweight South Korea, and the trust could benefit from the recently announced government initiative aimed at enhancing the appeal of local equities through reforms to corporate governance and enhanced distributions to shareholders (inspired by the recent success in Japan).