INVESTMENTS in the financial sector proved a boon to the Aberdeen Asian Smaller Companies Investment Trust in the year to the end of July, with India’s City Union Bank and Thailand’s Tisco Financial contributing the most to overall returns.

These investments helped the trust outperform its benchmark index over the period, with a net asset value total return of 15.4 per cent marginally outstripping the MSCI Asia Pacific ex Japan Small Cap index’s 14.3 per cent.

According to the trust’s annual report the prospect of rising interest rates had a positive influence on its financial holdings, as did a number of “very local factors”.

“City Union Bank benefited from [Indian] Prime Minister Narendra Modi’s demonetisation policy that drove consumers holding cash to place them in bank deposits instead and Tisco Financial was lifted by improving asset quality that outpaced that of the larger lenders,” the report said.

“Separately, Tisco bought Standard Chartered’s Thai retail operations, which will be integrated into the group. The move, which we view positively, is in line with its long-term strategy.”

Trust chairman Nigel Cayzer said India generally is presenting good investment opportunities for the trust, thanks to an “acceleration in economic growth”.

China, on the other hand, is less attractive “owing to concerns over corporate governance and quality of smaller companies there”.

Mr Cayzer added that the trust’s board is proposing a 12p final dividend for the year, which would take the total to 16p per share.

If approved by shareholders that would represent a 52 per cent increase on the 10.5p paid out in 2016.

The board is also proposing to pay a special dividend of 4p per share.