abrdn Emerging Markets ex-China Fund (AEF) Update, featuring Portfolio Manager Nick Robinson.

Nick Robinson, Portfolio Manager, joins Mike Taggart to discuss the significant activity in emerging markets outside of China in the past year as well as an outlook for 2026.

Transcript

Mike Taggart: Welcome to the latest podcast for the Aberdeen Emerging Markets ex-China Fund, ticker symbol AEF. I'm Mike Taggart, Aberdeen's Head of Closed-end Fund Investor Relations. With me is Nick Robinson, Aberdeen's Deputy Head of the Global Emerging Market Equities team and a Portfolio manager on AEF. Nick, thank you for taking the time to provide us with an update on the fund.

Nick Robinson: Thanks very much, Mike. It's great to be back on again. 

Mike Taggart: So maybe if I could come back to the the weakening US dollar, if it does continue to weaken. Right. How does that benefit the portfolio? Does it benefit the portfolio?

Nick Robinson: Yeah. I mean, it generally does benefit the portfolio. It's that benefits the portfolio more than if it was, a globalized market strategy that included China. And the rationale for that is China is a relatively managed currency. It's not particularly volatile versus other EM currencies. So yeah, if the dollar weakens, you want to be more exposed to those currencies that tend to be a bit more volatile. So, if this is like South Africa, Brazil, and the rest of Latin America. 

But yeah, I mean, generally speaking, you know, it helps for asset class. You know, it makes it a more interesting prospect for a large pool of capital globally that is dollar denominated. And I think we're seeing that begin to come through just in terms of our own business here at Aberdeen. And it more, much more interesting in EM this year, and then generally speaking, a weaker dollar typically means that, you know, rates, rates coming down, you're not being supported by higher rates. And lower rates generally are also helpful for emerging markets, you know, signifies that there's a bit more capital around emerging markets tends to be a bit less liquid as an asset class. So a bit more capital coming into a less liquid asset class generally has a pretty good or pretty positive impact on stock prices and market levels. 

Mike Taggart: And that's one of the benefits of having AEF in a closed-end fund is you don't have those flows. I mean, just closed-end fund in general, you don't have the flows affecting the portfolio the way you would if it was in a mutual fund or potentially even in an ETF.

So, two-part question here to kind of keep things fair and balanced. Where have you been facing the strongest headwinds. And then second, where are you finding the most attractive opportunities. Is there a certain sector or a certain geography? And I mean, you've talked about the themes, but if you get a little bit more, more specific. 

Nick Robinson: Yeah, more recently we've been finding quite a few interesting ideas in in Korea. You know, South Korea's going through quite an interesting a market reform process at the moment. Really actually started at the beginning of last year but really didn't gather momentum until there was the government change. And the reforms really are kind of trying to mirror what occurred in, in Japan. Decade or two ago. In terms of really just generating value from, from, or the value up program. So, you know, essentially incentivizing companies to be better stewards of capital in terms of simplifying corporate structures, returning more funds to, to shareholders, generally being better corporate systems and, and that has a should have a positive influence on or cost of equity and stock prices. So yeah, Korea's an interesting place at the moment. So we're finding opportunities there.

I suppose in terms of, you know, the places that are a bit more challenged. I mean, I would say, you know, as much as a lot of the Asian nations have had a lot of strong developments over the years and are becoming more like developed markets in a way. Yeah, there's still the same emerging market countries that seem to kind of go between boom and bust cycles and, and have really kind of stabilized or developed in, in the meaningful way that a lot of the Asian nations have.

So, you know, they're thinking about places like South Africa and, and Latin America, which still kind of goes through these pretty, pretty big cycles. And I think, you know, they you've just got to be quite, quite careful not to be in the wrong stocks. From the, even the right stocks actually at the, at the wrong points in the cycle.

Mike Taggart: So, is that because of their resource fee? I mean, I don't know, you know, much better. Is that because their resource based is you're talking about before is that's what drives those cycles or is it something else? 

Nick Robinson: Well, I mean, long term it's yeah, I mean, the fact that a resource basis adds a bit of cyclicality to be the economy, which is less helpful than say, you know, more kind of higher level manufacturing economy like Korea or Taiwan, where, know the demand for products is less kind of resource price. Or Intensive. I think it's a number of issues. I mean, it's poor governance. You know, poor infrastructure investment, poor levels of education in the economy. So, all those kinds of classic kind of long-term growth drivers of economies which are still under invested. And I think, you know, that leads just to more, more cycles in terms of shifts or quite sudden shifts between left governments and right governments and the lack of stability that that brings relative to countries with higher end manufacturing and, and less kind of volatility between different, left or right leaning governments.

Mike Taggart: Yeah. It's interesting. I always learn something, on these calls you Nick. It's always a pleasure speaking with you. 

Nick Robinson: Thanks, Mike. It's great to be on. 

Mike Taggart: And thank you everyone for listening to this podcast. There are three convenient ways to learn more about AEF. First, you can visit our website at Aberdeen investment.com. Second, you can email us at InvestorRelations@aberdeenplc.com or give us a call at 1-800-522-5465.

I'm Mike Taggart of Aberdeen. Thank you for listening.

This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment, recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment research. The views in this podcast are those of the contributors at the time of publication, and do not necessarily reflect those of Aberdeen.

The companies discussed in this podcast have been selected for illustrative purposes only, or to demonstrate our investment management style, and not as an investment, recommendation or indication of their future performance. The value of investments and the income from them can go down as well as up, and investors make it back less than the amount invested. Past performance is not a guide to future returns, return projections or estimates, and provide no guarantee of future results.