31 January 2024

Financial Report

Pacific Horizon Investment Trust


Pacific Horizon's objective is to invest in the Asia-Pacific region (excluding Japan) and in the Indian Sub-continent in order to achieve capital growth. The Company is prepared to move freely between the markets of the region as opportunities for growth vary. The portfolio will normally consist principally of quoted securities.

Comparative index

The principal index against which performance is measured is the MSCI All Country Asia ex Japan Index (in sterling terms).

Principal risks and uncertainties

The principal risks facing the Company are financial risk, investment strategy risk, political and associated economic risk, discount risk, regulatory risk, custody and depositary risk, operational risk, leverage risk, climate and governance risk, cyber security risk and emerging risks. An explanation of these risks and how they are managed is set out on pages 47 to 51 of the Company's Annual Report and Financial Statements for the year to 31 July 2023 which

is available on the Company's website: pacifichorizon.co.uk.

The principal risks and uncertainties have not changed since the date of that report.

Responsibility statement

We confirm that to the best of our knowledge:

a. the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';

b. the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year, their impact on the Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

c. the Interim Financial Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of the Board Angus Macpherson Chairman

13 March 2024

Pacific Horizon Investment Trust PLC

Summary of unaudited results

31 July 2023

31 January 2024


% change

Shareholders' funds*



Net asset value per ordinary share*




Share price




MSCI All Country Asia ex Japan Index (in sterling terms)†#







Active share



Six months to

Six months to

31 January 2024

31 January 2023

Revenue earnings per ordinary share



Six months to

Year to

31 January 2024

31 July 2023

Total returns#‡

Net asset value per ordinary share



Share price



MSCI All Country Asia ex Japan Index (in sterling terms)



Six months to 31 January 2024

Year to 31 July 2023

Period's high and low





Net asset value per ordinary share*





Share price










  • For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 23 to 25.
  • The MSCI All Country Asia ex Japan Index (in sterling terms) is the principal index against which performance is measured.
    # Source: Baillie Gifford/LSEG and relevant underlying index providers. See disclaimer on page 22.
    ‡ Alternative Performance Measure - see Glossary of terms and Alternative Performance Measures on pages 23 to 25. ¶ Key Performance Indicator.

Past performance is not a guide to future performance.


Interim management report


Over the six-month reporting period, share price performance for Asian stock markets was disappointing with the comparative index down 7.3% in sterling terms, led by significant weakness in China. The Company's NAV performed somewhat better, falling by a more modest 4.8%, with

the portfolio's Indian and Vietnamese holdings performing strongly. However, the Company's share price declined 7.8%, as the share price discount to NAV expanded from 8% to 11%. The Company bought back 335,775 shares which are held

in treasury.

There was a significant dispersion of geographic returns across the region, with the worst performing market indices, China and Hong Kong, both falling approximately 20%, while the best performing markets, India and Taiwan, rose approximately 16% and 8% respectively. The portfolio was generally well positioned in this environment, with India our largest country position (35% absolute and +16 percentage points ('pp') relative to the comparative index. By contrast, China (23% absolute and -10pp relative) and Hong Kong (+2% absolute and -4pp relative) were among our most substantial underweights.

By sector, the exposure of the portfolio remains similar to last year, with significant positions in both cyclical growth, particularly Indian real estate and materials, and secular growth, including technology and consumer companies.

Chinese holdings continued to perform poorly as a result of relatively slow economic growth coupled with weak investor sentiment. These factors have especially impacted private sector consumer and technology companies, which the portfolio is biased towards. While we are cognisant of the questions around Chinese economic growth and geopolitics, many of these are world-class growth businesses now trading on single-digit earnings multiples.

By contrast, Indian and Vietnamese holdings benefited from much stronger economies and renewed enthusiasm by both domestic and foreign investors. Vietnam's structural growth outlook continues to remain strong and valuations are still undemanding. In India, expectations in some sectors, for instance consumer discretionary and staples, appear to have run ahead of fundamentals and we are reviewing our positions accordingly. However, we are mainly exposed to sectors where valuations look reasonable and the multi-decade growth prospects means there is still significant upside potential, including real estate, banking and logistics.

We remain extremely positive on the long-term outlook. Asia has already taken up the baton of global demand growth, with China alone having contributed more to global growth in US dollar terms than the US over the past decade, while India is overtaking Japan. Asia is now better positioned financially than much of the developed world and, with a renewed investment cycle unfolding, Asian growth is likely to significantly outperform over the coming years. We strongly believe that the best way to benefit from this outlook is by investing in the best growth companies in the region.


The past couple of years have seen Asian markets hampered by several major headwinds, notably the strongest US dollar in decades, fears of recessions in western markets and armed conflicts in Europe and the Middle East. Despite these, there has been no Asian crisis, quite the opposite. Asian economies have remained resilient and are generally growing far faster than most western economies. This is a remarkable change from the Asian economies of old, when such a recent move in the US dollar alone would have been enough to spark a major economic crisis across the region.


Interim Financial Report 2024

Pacific Horizon Investment Trust PLC

We have previously articulated in detail the reasons for these changed fortunes. To summarise: Asian economies are far better positioned than in the past, especially when compared to developed markets; they have managed their economies more prudently, without printing money and have maintained sensible real interest rates for many years.

Combining this favourable macro-economic position with Asia's structurally faster growth rates and valuations at multi-year lows relative to developed markets, the obvious question is why haven't Asian markets performed better?

The first reason is timing. Several of the headwinds facing Asia, most importantly the strength of the US dollar, are yet to subside. Judging precisely when these might turn is difficult. However, with inflation peaking in the west, US interest rates likely to fall sometime in the next 18 months, US and European government spending and indebtedness continuing to soar, Asian economies will become increasingly more attractive.

The second issue continues to be China. A year ago, the stock market looked set to embrace China's reopening: Covid-19 was put in the rear- view mirror, the consumer was expected to bounce back, regulation of big tech was abating, Beijing was rolling out measures to restore confidence in the property sector and Biden's meeting with Xi in Bali gave hopes of a thawing in geopolitical tensions.

Instead, China continues to underperform, with an almost unprecedented third year of market falls and the MSCI China index down nearly 60% from its peak in early 2021. What went wrong? The consumer, largely shell-shocked from Covid-19 lockdowns and witnessing challenges in the property sector, has been significantly more cautious than envisaged. In turn, the private sector, with a weaker domestic economy and still cautious from the memory of regulatory headwinds, has been slow

to invest and employ.

Despite these issues, we continue to believe there are compelling investment opportunities in China. Firstly, valuations are extreme with many world class companies trading on low single digit multiples and others even below the cash on their balance sheet.

Secondly, the macro situation is not as dire as these valuations suggest. We are aware of many of the questions surrounding local government finance vehicles, GDP growth rates, demographics and much else. However, this is a US $17tr economy, with a relatively strong balance sheet and considerable fiscal, monetary and policy room to support the economy which it is starting to do.

Longer term, however, China faces two key challenges. The first is geopolitics; tensions with the US and her allies appear unlikely to significantly improve. Our analysis would suggest much of this is out

of China's hands with the direction of US policy already set irrespective of who becomes the next US president.

China can likely cope with much of the friction this brings with specific areas including semiconductors, artificial intelligence and advanced automation benefiting from China's desire to build its own domestic capabilities. While it is necessary to be selective in these sectors, our holdings in companies such as Silergy (semiconductors) and Baidu Inc (online search and artificial intelligence), both of which were added to over the period, should be significant beneficiaries of these trends.

The second issue is arguably more important: how do Xi and the Chinese Communist Party want the economy to operate over the next decade and, specifically, what role will the private sector be allowed to play? The answer to these has become less clear, making longer term assumptions more difficult.


We made several modest changes to the portfolio's exposure to Chinese holdings. In addition to Silergy and Baidu Inc (as mentioned above), we added to unlisted ByteDance, owner of Douyin and TikTok, the world's most popular short form video apps. We also completed the purchase of MicroConnect, a private company, which finances small and medium sized Chinese businesses. These purchases were funded from the sales of other Chinese companies, including a handful of internet businesses, for example Meituan and Dada Nexus. We also sold both of our Chinese green technology businesses, LONGi and Wuxi Lead, where competition was significantly more intensive than expected.

Despite the sales and purchases roughly matching, market movements in China took the portfolio's absolute China exposure down from 34% to 23% over the period.

India has been the complete opposite to China.

The business-friendly reforms of the Modi government have led to a robust economy and a surge of foreign investment. The result has been the region's most buoyant stock market, which has taken our Indian exposure from 24% to 35% over the period, making it both the portfolio's largest absolute

and relative (+16pp) country position.

We remain enthused on the long-term outlook for the country but acknowledge that valuations are beginning to look stretched in certain areas, particularly in the consumer sector and in many small and mid-cap companies. Nevertheless, we continue to find attractive opportunities and are exposed to areas where we believe there is considerable upside. Indian real estate is our largest exposure (10% of net assets) and benefits from house prices being the most affordable they have been in the past few decades, combined with a dramatic consolidation in the industry over the past five years. We also have large positions in

Indian autos (Tata Motors), industrials (Skipper and Ramkrishna Forgings), where India is benefiting from its first major capex cycle in years, and the burgeoning internet sector through our holding in Delhivery (ecommerce delivery) and the unlisted Dailyhunt (social media).

We continue to believe Vietnam remains the best structural growth story of any Asian economy driven by its successful export manufacturing base. In May 2023, we and the Board visited companies in Vietnam to test this belief. With most share prices still below the market peak back in 2022, they appear to offer compelling value. We added to the holdings in Mobile World, the country's largest electronics retailer, which is also rapidly creating the country's leading grocery chain, and FPT, Vietnam's leading technology firm.

As at period end, the Company held five private companies, representing 8.4% of total assets, and the Company was ungeared over the period.


We are long-term investors, running a high conviction growth portfolio that is index agnostic. Performance will be volatile and occasional underperformance is to be expected. The portfolio has generated significant value for shareholders over the past five years, the timescale on which we believe tends to reflect performance more accurately, though over more recent shorter periods, results have been weaker.

Over the six months to 31 January 2024, the Company's NAV fell by 4.8%, while the share price fell by 7.8%. The comparative index declined 7.3% in sterling terms, all figures total return.

India was the most significant contributor to portfolio performance, adding 710bp. This was led by our Indian real estate companies, as they benefited


Interim Financial Report 2024

from the first property upcycle in the country for more than a decade. Prestige Estates was the best performing stock in the portfolio, adding 180bp, as presales grew nearly 90% year over year.

Our other property related names, Indiabulls Real Estate, Phoenix Mills and Lemon Tree Hotels, added a further 290bp between them. Our Indian industrial holdings, Ramkrishna Forgings (manufacturer) and Skipper (power transmission infrastructure), were the second biggest contributors, rising 36% and 53% respectively as infrastructure spending continued to pick up across the country.

We also had a recovery in a few of our online-related companies in India, with the share price of both Delhivery (ecommence delivery) and Policybazaar (online insurance comparison site) rebounding from their early 2023 lows. Delhivery experienced a strong resumption in growth, from what we always believed was a post covid cyclical lull and turned profitable.

Vietnam and Hong Kong both added around 80bps. The Hong Kong market fell 18% over the period and our significant underweight position (-4pp relative) benefited performance. Conversely, Vietnam

was a significant overweight (+9pp relative) and performance was led by our bank holdings HDBank and Military Commercial Joint Stock Bank.

Several of the semiconductor holdings performed well, including EO Technics, MediaTek and Koh Young, however their contribution was offset by our single largest detractor to performance coming from our significant underweight to TSMC (-6.4pp relative).

By country, China was the worst performing country detracting 180bp from portfolio performance.

Here, our holding in Li-Ning was the biggest detractor, with the share price falling 64% as the company announced issues with its inventory

Pacific Horizon Investment Trust PLC

management. After consulting with the company and many of its distributors, we do not believe this is an issue that will damage the brand and growth should resume over the coming 12 months. Other notable laggards were: JD.com, which continues to feel competitive pressure in the ecommerce space; Dada Nexus, which carries out logistics for JD.com; and the insurance company Ping An where the market was concerned about potential financial regulation and the company's exposure to the property market.


We remain extremely positive on the long-term outlook for the region. The rise of the Asian middle class, accelerated by technology and innovation, continues to be one of the most powerful investment opportunities of the coming decade. We are enthused by the number of exciting growth companies we can buy that are exposed to these themes, many of which are now trading on historically low valuations. Combined with what seem brighter macro-economic conditions across Asia compared to developed markets, we believe looking east remains firmly

the right course of action.

The principal risks and uncertainties facing the Company are set out on the inside cover of this report.

Baillie Gifford & Co Limited

Managers and Secretaries


Valuing private companies

We aim to hold our private company investments at 'fair value', i.e. the price that would be paid in an open-market transaction. Valuations are adjusted both during regular valuation cycles and on an ad hoc basis in response to 'trigger events'. Our valuation process ensures that private companies are valued in both a fair and timely manner.

The valuation process is overseen by a valuations group at Baillie Gifford, which takes advice from an independent third party (S&P Global). The valuations group is independent from the investment team, with all voting members being from different operational areas of the firm, and the investment managers only receive final valuation notifications once they have been applied.

We revalue the private holdings on a three-month rolling cycle, with one-third of the holdings reassessed each month. During stable market conditions, and assuming all else is equal, each investment would be valued twice in a six month period. For our investment trusts, the prices are also reviewed twice per year by the respective investment trust boards and are subject to the scrutiny of external auditors in the annual audit process.

Beyond the regular cycle, the valuations team also monitors the portfolio for certain 'trigger events'. These may include changes in fundamentals,

a takeover approach, an intention to carry out an initial public offering ('IPO'), company news which is identified by the valuation team or by the portfolio managers or meaningful changes to the valuation of comparable public companies. Any ad hoc change to the fair valuation of any holding is implemented swiftly and reflected in the next published net asset value. There is no delay.

The valuations team also monitors relevant market indices on a weekly basis and updates valuations in a manner consistent with our external valuer's (S&P Global) most recent valuation report where appropriate. Continued periods of market volatility has meant that valuations continue to be reviewed much more frequently, in some instances resulting in a further valuation movement. The data below quantifies the revaluations carried out during the six months to 31 January 2024, however doesn't reflect the ongoing monitoring of the private investment portfolio that hasn't resulted in

a change in valuation.

Pacific Horizon Investment Trust PLC*

Instruments held


Revaluations performed


Percentage of portfolio revalued up to 2 times


Percentage of portfolio revalued 3+ times


  • Data reflecting period 1 August 2023 to 31 January 2024 to align with the Company's reporting period end.

Despite a general improvement in sentiment, continued volatility in some public markets has tempered valuation recovery. The average movement in company valuations and share prices across the portfolio are shown below.



movement in



in investee


share price


Instruments valued*



  • Data reflecting period 1 August 2023 to 31 January 2024 to align with the Company's reporting period end.


Interim Financial Report 2024

Pacific Horizon Investment Trust PLC


List of investments

at 31 January 2024 (unaudited)


% of total





assets *

Samsung Electronics

South Korea

Memory, phones and electronic



components manufacturer

Dailyhunt (VerSe Innovation)


News aggregator application



Series I Preferred

Dailyhunt (VerSe Innovation)


News aggregator application



Series Equity

Dailyhunt (VerSe Innovation)


News aggregator application



Series J Preferred



Ramkrishna Forgings


Auto parts manufacturer



Tata Motors


Automobile manufacturer





Logistics and courier services provider



Indiabulls Real Estate


Domestic and commercial real



estate provider

EO Technics

South Korea

Manufacturer and distributor of



semiconductor laser markers

Prestige Estate Projects


Owner and operator of residential



real estate properties

Zijin Mining Group


Gold and copper miner



ByteDance Series E-1 Preferred


Social media



Reliance Industries


Petrochemical company



Bank Rakyat


Consumer bank



Phoenix Mills


Commercial property manager



Lemon Tree Hotels


Owner and operator of a



chain of hotels and resorts

Ping An Insurance


Life insurance provider



Accton Technology Corporation


Server network equipment






Consumer bank



SK hynix

South Korea

Semiconductor manufacturer



Baidu Inc


Internet provider





Copper miner





Transmission and distribution



structures provider

  • For a definition of terms see Glossary of terms and Alternative Performance Measures on pages 23 to 25.
    Denotes private company investment.
    Denotes listed security previously held in the portfolio as a private company investment.


Interim Financial Report 2024

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Pacific Horizon Investment Trust plc published this content on 22 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 10:19:43 UTC.