TIDMDTL
RNS Number : 0329S
Dexion Trading Limited
14 November 2011
Dexion Trading Limited ("the Company")
October Net Asset Value
The net asset value of the Company's Shares as of 31 October
2011 is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
135.32 pence -0.30% -2.07%
-------------- ---------------- ----------------
In calculating the Company's Net Asset Value the Company's
Administrator will rely solely upon the valuation of GBP
denominated Permal Macro Holdings Limited ("Permal Macro") Class A
shares provided by Permal Macro. The Investment Adviser and third
party service providers to Permal Macro, rely on estimates of the
value of Underlying Funds in which Permal Macro invests, which are
provided, directly or indirectly, by the managers or administrators
of those Underlying Funds and such valuations may not be considered
'independent' or may be subject to potential conflicts of interest.
Such estimates may be produced as at valuation dates which do not
coincide with valuation dates for Permal Macro and may be unaudited
or may be subject to little verification or other due diligence and
may not comply with generally accepted accounting practices or
other valuation principles. The Investment Adviser may not have
sufficient information to confirm or review the completeness or
accuracy of information provided by those managers or
administrators. In addition, these entities may not provide
estimates of the value of Underlying Funds in which Permal Macro
invests on a regular or timely basis or at all with the result that
the values of such investments may be estimated by the Investment
Adviser. Both weekly estimates and bi-monthly valuations may be
based on valuations provided as of a significantly earlier date and
hence the published valuation may differ materially from the actual
value of Permal Macro's portfolio. Other risk factors which may be
relevant to this valuation are set out in the Company's prospectus
dated 12th March 2008.
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
Despite the European Union's plans to address the region's
sovereign debt problems managers remain sceptical, believing that
the announced plans fail to address many crucial details, such as
which non-European sovereigns will contribute capital to the
European Financial Stability Facility ('EFSF') and how much will
they contribute. Additionally, in the longer-term, much needed
economic reforms (e.g. budget cuts in Italy) will present further
challenges. Many managers believe that Europe is entering a
recession as core growth slows. They note that the situation in the
US, as shown by recent economic data, is more positive and it has
become increasingly unlikely that the US will enter a double-dip
recession. However, the country still faces notable headwinds, in
particular a weak housing sector, a high unemployment rate and the
need for continued consumer deleveraging. Managers remain more
optimistic about Asia, particularly China, which they believe will
successfully engineer a soft landing. Given these market
conditions, a key requirement in the managers' minds is to remain
nimble and flexible, and to shift their portfolios as appropriate
in a highly proactive fashion.
Market Overview
Markets during October were characterised by considerable
volatility as investors speculated about the potential outcome of
the EU summit held at the end of the month. Investor optimism
gained momentum early in the month when Germany and France took
steps to recapitalise European banks. Market confidence grew
further with the release of positive economic data reports in the
US. When the specifics of the EU summit were finally announced,
risk assets experienced a powerful rally. The EU plan included a
voluntary 50% write-down on Greece's privately held debt, measures
to recapitalise European banks and increasing the leverage of the
EFSF.
The positive US economic data reports released during the month
led to a rise in global equity markets. These reports included
better than expected September US employment numbers, a lower than
expected trade deficit, an increase in US consumer spending for
September, and the Commerce Department's report of a 2.5% increase
in GDP for Q3 2011. When the EU finally outlined the steps that
they would take to tackle the Eurozone debt crisis, markets again
reacted favourably and global equity markets registered a strong
rebound with the Dow Jones, NASDAQ Composite and S&P 500 (with
dividends reinvested) breaking into positive territory for 2011.
European and Asian equity markets also rose appreciably.
As global recessionary fears receded, US bond prices began to
drop, falling sharply in the middle of the month amid improving US
economic data and hopes for positive developments in the Eurozone
before rising in the last couple of days of the month as equities
declined. Ultimately, US 10-year Treasuries declined in October,
while more short-dated bonds ended the month flat. Emerging market
bonds climbed in a sharp reversal of the losses that they had
suffered in September.
Amid substantial FX volatility, one of the most notable currency
moves was an abrupt decline of the US Dollar against many of its
main counterparts, in particular the Euro, which made gains versus
most of its global counterparts as European finance ministers
announced a coordinated effort to recapitalise Europe's ailing
banking sector. Commodity driven currencies such as the Australian
Dollar and the Brazilian Real, as well as emerging market
currencies, surged against the US Dollar as global growth concerns
subsided and investors favoured risk assets.
The natural resources sector rallied in October as investor
concerns about the European debt crisis and subsequent bailout
package temporarily subsided. Additionally, fears of an impending
slowdown in global growth were mitigated by further evidence that
China remains on track to engineer a soft landing and that the US
is not likely to enter a double dip recession. The energy sector
rebounded strongly in October, with crude prices up over 17%
following the 11% fall in September. Cold weather across parts of
the US lifted demand for natural gas at the start of a seasonal
cycle. Base metals were also up, rebounding from being oversold in
September. Copper, often quoted as a proxy for global growth, was
the best performing base metal, gaining over 15%. Gold and silver
rallied during the month and precious metals related equities
rebounded to finish the month positively. Uncertain supply in the
US and stronger than expected export demand benefited agricultural
prices.
Strategy Overview
Discretionary: +0.56%. Although the Portfolio's discretionary
managers are generally bearish, those who were more constructive -
particularly on emerging markets - registered gains from their
pro-risk stance. In particular, long exposure to emerging market
and commodity currencies versus the US Dollar and, to a lesser
extent, long positions in global equity indices, proved rewarding.
In addition, long positions in emerging market bonds, particularly
in Mexico, South Africa and Brazil, proved beneficial. On the
negative side, many positions that had been lucrative in September
were punished in October for the more bearish managers, including
long positions in US and German government bonds and long US Dollar
exposure.
Systematic: -2.42%. The trend following managers suffered from
the sharp risk-off to risk-on reversal that took place between
September and October, encountering losses in their long global
fixed income positions which had declined amid the surge in risk
appetite. Losses were also registered as a result of short
positions in equities. Currencies were the worst performing sector,
with losses stemming from short Euro exposure. A number of
non-trend following managers suffered from their long bond
exposure, although some others benefited from long positions in the
Australian Dollar.
Natural Resources: +2.76%.Managers benefited from the broad
rally that took place across the natural resources sector, with
notable gains occurring in energy. Long positions in energy-related
equities proved profitable, with particularly strong gains in
exploration and production companies as well as in oil services.
Long positions in gold bullion, as well as gold mining companies,
were also beneficial to returns.
Relative Value Arbitrage: +2.44%.Strong performance was driven
primarily by long positions, which benefited from the rally in
global equity markets.
Number of
Allocation Managers as
as of 31 October of Performance by
Strategy % 31 October Strategy %
-------------------------- ------------------ ------------- -----------------
October YTD
-------------------------- ------------------ ------------- --------- ------
Discretionary(1) 53 22 +0.56 -0.73
-------------------------- ------------------ ------------- --------- ------
Natural Resources 9 12 +2.76 -6.01
-------------------------- ------------------ ------------- --------- ------
Relative Value Arbitrage 5 3 +2.44 +2.07
-------------------------- ------------------ ------------- --------- ------
Systematic(1) 29 12 -2.42 +1.46
-------------------------- ------------------ ------------- --------- ------
Cash 4 - - -
-------------------------- ------------------ ------------- --------- ------
Total 100 48(1)
-------------------------- ------------------ ------------- --------- ------
(1) Discretionary and Systematic have one manager in common.
Strategy returns are in US$, net of underlying manager fees
only, and not inclusive of either Dexion Trading's or Permal
Macro's fees and expenses.
Voting Rights and Capital
The Company's share capital consists of 97,571,896 GBP shares
with voting rights. This figure may be used by shareholders as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in the Company under the FSA's Disclosure and Transparency
Rules.
Supplementary Information
Click on, or paste the following link into your web browser, to
view a full review of the Dexion Trading Limited portfolio.
http://www.rns-pdf.londonstockexchange.com/rns/0329S_-2011-11-14.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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