Asian Opportunities Equity Fund

Capital at risk. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

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Overview

Manager's Outlook

We see incrementally positive signs that Asia ex-Japan equities are turning the corner, even as overall investor sentiment remains cautious. Amid concerns about persistent inflation, rising interest rates, and the odds of a recession globally, China's easing of strict COVID lockdowns is a welcome development from our perspective. We expect potentially improving conditions in China to augur well for the region's stock market given the Chinese market's significant weighting.

Importantly, we consider China's countercyclical nature of policymaking to be intact. With the economy under pressure, the government has switched to a pro-growth stance, introducing a series of monetary and fiscal stimulus measures. Among these are lower mortgage rates, which we think reflect the government's bid to stabilize the property sector. Regulatory action in the internet industry has also eased, reinforcing our belief that we are likely past the peak of the regulatory cycle. These moves, combined with China's economic reopening, lead us to expect a steadier path ahead for the economy.

From a valuation standpoint, we believe that Chinese equities have broadly priced in expectations for a weak first half of the year. Across Asia ex-Japan, we see compelling valuations for several companies whose structural growth prospects remain visible to us. We believe that indiscriminate sell-offs create opportunities for long-term investors like us to gain exposure to high-quality companies with solid management teams that care about shareholder returns.

We are monitoring the impact of rising inflation in Asia ex-Japan, even though our portfolio positioning is not centered on a particular view on price trends. Rather, our focus is on company-specific factors, and we continually assess the ability of individual businesses to withstand higher costs or pass them on to their customers. At the macroeconomic level, certain central banks facing stronger price pressures have preemptively pursued monetary tightening, whereas China is in a relatively distinct position where inflation remains modest. In general, we think that the region's economic fundamentals remain healthy, with current and fiscal accounts still looking resilient.

Apart from inflation, other potential market headwinds we are watching out for include material economic slowdowns globally, renewed coronavirus lockdowns in China, and geopolitical instability. We expect market recoveries to be uneven, which we think underscores the importance of active management in positioning for an upturn.

Strategy

Fund Summary

Our Asia-based investment team employs bottom-up, fundamental analysis to identify established companies with leading market positions, characterised by returns-focused capital allocation, and run by good management teams who care about shareholder returns. We believe taking a long-term view can exploit mispricings in the region caused by short-term investing. The promotion of environmental and/or social characteristics is achieved through the fund's commitment to maintain at least 10% of the value of its portfolio invested in Sustainable Investments, as defined by the SFDR. Additionally, we apply a proprietary responsible screen (exclusion list). The manager is not constrained by the fund’s benchmark, which is used for performance comparison purposes only.

Performance - Net of Fees

Past performance is not a reliable indicator of future performance.

31-May-2024 - Jihong Min, Portfolio Manager,

Asia ex-Japan equities rose in May amid divergent performances across the region’s markets. Strength in large Taiwanese technology stocks and fresh policy support for China’s housing sector were bright spots, whereas currency concerns held back Indonesian and Philippine equities. Within the portfolio, stock selection in Taiwan boosted relative returns. Shares of a semiconductor chip designer rallied after it flagged artificial intelligence (AI) applications for data centres and auto chips as key growth drivers in the next decade. We expect the company to achieve strong earnings growth over time as it expands in new areas related to AI and other emerging technologies. Our stock choices in South Korea were another relative contributor. An insurer’s shares gained after it posted better-than-expected earnings. The company also raised its shareholder return target, which corresponds with our belief that it can better manage its excess capital. Conversely, our overweight position and stock selection in Indonesia hurt relative performance. Shares of a bank fell as sentiment toward Indonesia’s economy weakened amid currency pressures. Nonetheless, we have seen structural improvements in the bank and believe they can help its valuation rerate.

31-Jan-2024 - Jihong Min, Portfolio Manager,

Financials commanded the largest absolute sector position and overweight against the benchmark in January. We trimmed our overall exposure to Indian banks but invested in a South Korean insurer, whose valuation we expect to improve as uncertainty around new accounting rules fades. We also like its healthy dividend yield and see room for it to return excess capital to shareholders. Our next largest sector allocation was in information technology, where we were overweight. Diversifying our exposure to the recovering memory chip market, we started a position in a chipmaker, which is also a major supplier of artificial intelligence chips.

31-Jan-2024 - Jihong Min, Portfolio Manager,

Our biggest absolute country exposure in January was to China, where we turned more underweight against the benchmark. We still see structural growth or cyclical improvement potential in a variety of companies but selectively adjusted our holdings amid the economy’s weaker-than-expected recovery. We sold out of a beer company facing declining sales volumes and a housing developer sensitive to the property market cycle. In India, our next largest absolute market position, we also widened our underweight stance. We sold shares of an Indian private-sector bank as we reassessed its potential for rapid growth without hurting its margins and profitability.

Benchmark Data Source: MSCI. MSCI index returns are shown with reinvestment of dividends after the deduction of withholding taxes. MSCI and its affiliates and third party sources and providers (collectively, “MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

Past performance is not a reliable indicator of future performance.

Source for performance: T. Rowe Price. Fund performance is calculated using the official NAV with dividends reinvested, if any. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. It will be affected by changes in the exchange rate between the base currency of the fund and the subscription currency, if different. Sales charges (up to a maximum of 5% for the A Class), taxes and other locally applied costs have not been deducted and if applicable, they will reduce the performance figures.

Daily performance data is based on the latest available NAV.

The Funds are sub-funds of the T. Rowe Price Funds SICAV, a Luxembourg investment company with variable capital which is registered with Commission de Surveillance du Secteur Financier and which qualifies as an undertaking for collective investment in transferable securities (“UCITS”). Full details of the objectives, investment policies and risks are located in the prospectus which is available with the key investor information documents and/or key information document (KID) in English and in an official language of the jurisdictions in which the Funds are registered for public sale, together with the articles of incorporation and the annual and semi-annual reports (together “Fund Documents”). Any decision to invest should be made on the basis of the Fund Documents which are available free of charge from the local representative, local information/paying agent or from authorised distributors. They can also be found along with a summary of investor rights in English at www.troweprice.com. The Management Company reserves the right to terminate marketing arrangements.

Please note that the Fund typically has a risk of high volatility.

Hedged share classes (denoted by 'h') utilise investment techniques to mitigate currency risk between the underlying investment currency(ies) of the fund and the currency of the hedged share class. The costs of doing so will be borne by the share class and there is no guarantee that such hedging will be effective.

The specific securities identified and described in this website do not represent all of the securities purchased, sold, or recommended for the sub-fund and no assumptions should be made that the securities identified and discussed were or will be profitable.

Attribution Data: Analysis represents the total performance of the portfolio as calculated by the FactSet attribution model and is inclusive of other assets that that will not receive a classification assignment in the detailed structure shown. Returns will not match official T. Rowe Price performance because FactSet uses different exchange rate sources and does not capture intra-day trading. Performance for each security is obtained in the local currency and, if necessary, is converted to U.S. dollars using an exchange rate determined by an independent third party. Figures are shown with gross dividends reinvested.

Sources: Copyright © 2024 FactSet Research Systems Inc. All rights reserved. MSCI/S&P GICS Sectors; Analysis by T. Rowe Price Associates, Inc. T. Rowe Price uses the MSCI/S&P Global Industry Classification Standard (GICS) for sector and industry reporting. Each year, MSCI and S&P make changes to the GICS structure. The last change occurred on September 28, 2018. T. Rowe Price will adhere to all future updates to GICS for prospective reporting.

The Global Industry Classification Standard ("GICS") was developed by and is the exclusive property and a service mark of Morgan Stanley Capital International Inc, ("MSCI") and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") and is licensed for use by [Licensee]. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or impIied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any or such standard or classification, Without limiting any or the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

A full list of the currently issued Share Classes including Distributing, Hedged, and Accumulating Categories may be obtained, free of charge and upon request, from the registered office of the Company.

©2024 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Citywire Data Source: Citywire – where the fund manager is rated by Citywire, the rating is based on the manager’s 3-year risk adjusted performance. For further information on ratings methodology, please visit www.aboutcitywire.com.

Risks

Typical Investor