Asia Dragon Trust (DGN) 413p

Loss to date: 19.3%

Original entry point: Buy at 512p, 24 June 2021

Ten months ago, we flagged an opportunity at Asia Dragon Trust (DGN) which invests in market-leading companies.

Since then, the trust has faced considerable headwinds as sentiment soured towards Chinese stocks. Last year regulatory clampdown hurt equities in this part of Asia. Now, resurgence of Covid and associated lockdown measures have clouded the country’s economic outlook.

These factors have weighed on Asia-focused funds in general and Asia Dragon Trust has been caught up in the storm, resulting in the share price trading nearly a fifth lower than when we said to buy last June.

Its latest set of half-year results showed the trust outperformed its benchmark although both fell in absolute terms. The trust’s net asset value declined by 7.7% while the MSCI All-Country Asia ex-Japan index fell by 8.1%.

The two fund managers believe the current market weakness is a good time to buy decent companies at more attractive levels. The trust has also increased its exposure to India with stakes in e-commerce and online insurance companies.

SHARES SAYS: Even though recent share price weakness is frustrating the trust’s quality focus remains attractive. Be patient.

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