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Baillie Gifford Shin Nippon PLC on Friday said that higher interest rates in the US and a weak yen have been persistent headwinds but appear to be reversing, as it reported a net asset value fall.
The fund, which invests primarily in small Japanese companies said net asset value edged down 6.8% to 137.8 pence per share as at July 31 from 147.8p at January 31.
NAV total return was negative 6.2% for the six months to July 31, sharply underperforming against its comparative index, the MSCI Japan Small Cap, which had a positive return of 6.0%.
The company declared no interim dividend, unchanged from a year ago.
Looking ahead, Baillie Gifford Shin said: ‘Higher interest rates in the US and a weak yen have been persistent headwinds but these appear to be reversing, which is being reflected in the recent positive share price performance of several holdings.’
The US Federal Reserve on Wednesday opted for a rate cut of half a percentage point, its first since 2020. The central bank reduced the federal funds rate to 4.75%-5.00% from 5.25%-5.50%, where it has been since July 2023.
Further, Baillie Gifford Shin said Friday: ‘The vast majority of Shin Nippon’s portfolio is invested in companies focussing mostly on the domestic Japanese market so the impact on the portfolio from weak Chinese demand should be muted.’
Baillie Gifford Shin shares rose 1.1% to 119.47 pence each on Friday morning in London.
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