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Aberdeen Asia-Pacific Income Fu Message Board

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  • Sapper588 Sapper588 Feb 9, 2000 12:12 PM Flag

    Dividend cut?

    Yes, the AUD is the most important single factor
    in FAX's NAV and a major factor in its dividend. The
    great great majority of FAX's Korean debt securities
    are dollar denominated so it can't get any currency
    appreciation. It is possible to get credit appreciation from
    the Korean and other Asian debt which is something
    not likely with the higher credit rating Australian
    debt.
    I can never remember seeing a stock rise on
    announcement of a dividend cut, in fact a significant drop is
    almost universally the norm. The degree of the FAX cut
    could effect market reaction. Dividend concerns most
    certainly could be priced into FAX, so a small cut might
    have little effect. If the monthly dividend drops a
    penny or more, I expect a distinct and noticable drop
    in FAX's share price.
    I wouldn't focus too much
    on any recent rise in FAX's share price. It seems
    most other closed-end bond funds (at least those that
    I follow CGF, DSF, & MSY) have been strong as of
    late.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Did some selling, unloaded all my MSY. I think at
      a 3% discount, it's fully valued compared to the
      rest. Had a lot of CGF from the rights ffering and sold
      some there too, into this recent strenght.

      Nice
      to ses a up move on DSF too. I'm a bit disappointed
      it has not traded better, at least back to my cost
      now.

      I "monetizing" looking for the right opportunity on
      a few stocks, FAX for one.
      Any other CEF's you
      like? Been a long time between rights offerings, it's
      always been my lifeblood in this area for new ideas.

      • 1 Reply to flipper_58
      • I sold a little of my CGF - my original holding.
        Would like to hold CGF long enough for a long term
        capital gain and perhaps into 01.

        Probably a lot
        of people feel the same way, so might be a price
        drop at those times.

        I agree that DSF is not
        fully valued in relation to fundamentals. Maybe the
        small market cap?

        I would love to find a few
        "special situtations" right now such as rights offerings
        or arbs on REIT MBO/LBOs. Not too many of them
        around.

        I am liking Europe more and more. Our dollar is
        strong and they appear to be getting some of their
        economies turned around. Of course I am interested in
        equity over debt there. I had a buy in for the Austria
        Fund this morning, but it took off and it won't be
        filled today. Also interested in the Ireland
        Fund.

        Will probably buy FAX somewhere below $5, if it
        drops that far down.

    • If EQUITILINK managers understand the consequnce
      of div cut, they will not cut the dividend. Then, we
      may see FAX back to $5.5.

      If they do afraid
      of the falling of NAV, they, instead of cut div, but
      cut portfolio holding and try to match share price to
      NAV by tendering shares as I previously described.
      The FAX's NAV and dividend may lower slightly, but
      not the share price because of share buyback.


      We do not care for the name of FAX! Let it be
      dissolved within ten years!! Equitink managers can also
      start up an Asia Income Fund to absorbed the 10+ yrs
      FAX seculities.

      Note that FAX has 5.2% Korean
      currency

      As of December 31, 1999, the portfolio was
      invested as follows:

      ------- -----Currency ----
      Credit/Geographic
      Australia -------- 74.8% ---- 74.8%
      New
      Zealand -----0.3% ---- 0.3%
      United States ----14.4%
      ---- 0.4%*
      South Korea -----5.2% ---- 11.5%

      Philippines ----- 1.8% ---- 4.2%
      Thailand ---- 2.2% -----
      3.4%
      Malaysia ---- 0.0% ---- 2.4%
      Singapore ----
      1.1% 1.1%

      Taiwan ---- 0.2% ---- 0.2%

      • 1 Reply to wp5151
      • "If EQUITILINK managers understand the consequnce
        of div cut, they will not cut the
        dividend"

        First look at a few things. 1) the funds investment
        portfolio only earns 80% of what it pays out, 20% is paid
        out of the principle. By paying out of principle it's
        turning after tax money YOU put in and turning them into
        taxable dividends, not a very sound practice, do you
        agree?

        2)Many funds do not like to tender shares because many
        times it has a short term effect. A high payout has
        proven to be more effective from what I see. But I do
        agree many times buybacks make more sense than taking
        matured bonds and buying 8% coupon bonds, when the fund
        is trading at a 15% discount.

 
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