The first half of the financial year to the end of February 2026 was a strong period for Asian markets. Henderson Far East Income delivered a net asset value total return of 23.3% over the period, compared with 26.2% for the MSCI All Country Asia Pacific ex Japan Index.
Technology was the dominant driver of returns across Asia during the period as investment linked to artificial intelligence continued to accelerate. Strong demand for advanced chips, servers and data centre equipment supported Asian technology supply chains, particularly in North Asia.
Taiwan and South Korea were notable beneficiaries, with companies involved in sophisticated chip manufacturing leading market gains. South Korea also saw support from ongoing corporate reform, which is encouraging companies to improve capital discipline and shareholder returns.
Elsewhere, materials and energy companies also performed well, while consumer‑focused sectors were much weaker, which weighed on parts of South and Southeast Asia.
Our Korean holdings were key contributors to performance. Companies such as Samsung Electronics, Hyundai Motor, Kia Corporation, SK Square and Industrial Bank of Korea all delivered strong returns during the period.
However, not all areas contributed positively. India continued to underperform, reflecting weaker consumer demand, softer employment conditions and limited foreign direct investment. India was one of the weaker markets over the period.
From a stock perspective, our underweight positions in large technology index names such as TSMC and SK Hynix held back relative performance, given their significant influence on the benchmark. In addition, some high‑yield defensive holdings lagged in the strong equity market, including Macquarie Korea Infrastructure Fund and First Pacific. Energy names such as GAIL and Origin Energy also detracted from returns.
During the period, we made a number of targeted additions to strengthen the portfolio. We added Samsung Electronics preference shares, which are a different class of shares that typically pay a higher dividend than ordinary shares but do not carry voting rights. At the time, they were trading at a meaningful discount to Samsung’s ordinary shares while offering a higher dividend. This coincided with growing confidence in Samsung’s role in supplying memory chips used in AI applications.
We also initiated a position in CATL, a Chinese global leader in batteries and energy storage, where rising profits and cash generation are supporting future dividend potential.
In Southeast Asia, we increased exposure to Thailand through companies that generate strong, sustainable income, such as Advanced Info Service and PTT Exploration and Production, which stand to benefit from higher energy prices.
We also opened a new position in Keppel, a Singapore‑based infrastructure company that has been selling non‑core assets and simplifying its business. This should help free up cash and support higher dividends over time.
To fund these additions, we continued to reduce exposure to India, where near‑term growth remains more uncertain, and exited GAIL and Power Grid Corporation of India. In China, we sold Trip.com ahead of a regulatory investigation that later led to a sharp share price decline. We also took profits in Australia, selling Goodman Group and Wesfarmers after strong performance as valuations reached our target levels.
Looking ahead, Asia continues to offer a compelling mix of long‑term growth and income opportunities. The region sits at the heart of global technology supply chains, with AI driving demand across semiconductors, infrastructure and energy. At the same time, banks are benefiting from digital adoption and corporate reform across markets such as South Korea, China and Singapore, supporting stronger shareholder returns.
While geopolitical risks and volatility remain, these conditions also create opportunities. With a diversified portfolio and a focus on resilient, cash‑generative companies, we believe we are well positioned to deliver both sustainable income and long‑term growth.