TIDMDTL
RNS Number : 0186M
Dexion Trading Limited
19 August 2013
Dexion Trading Limited (the "Company")
July Net Asset Value
The net asset value of the Company's Shares as of 31 July 2013
is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
138.57 pence -0.42% +2.57%
-------------- ---------------- ----------------
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 ("PMH") Class A shares
provided by PMH. The Investment Adviser and third party service
providers to PMH, rely on estimates of the value of Underlying
Funds in which PMH 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 PMH 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 PMH 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 PMH's portfolio. Other
risk factors which may be relevant to this valuation are set out in
the Company's prospectus dated 12 March 2008.
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
Managers continue to hold a more favourable view of developed
markets vis-à-vis emerging markets, particularly towards the US and
Japan. In the US, the economy continues to be resilient, boosted by
solid data in the housing and employment sectors. As a result,
monetary policy in the US is expected to differ from its peers,
especially the eurozone. Indeed, while the Fed has gone to great
pains to explain that it does not intend to tighten, it has become
virtually a fait accompli that it will begin tapering in September.
This should see the US dollar continue to strengthen while US
10-year yields have the potential to rise further. However, as the
Fed moves to taper, the ECB is expected to continue its
accommodative policies. While there has been some marginal
improvement in economic data in Europe, the region remains
susceptible to political upheaval. In Japan, the reflationary story
is set to gain renewed traction following the July elections, which
have served as testament to the success of Abe's aggressive QE.
Japanese equities stand to continue their rise based on continued
aggressive easing, positive earnings announcements and the
continued depreciation of the yen. Views on the Chinese economy
remain rather bleak amid a combination of slowing growth and the
authorities clamping down on excessive credit creation. Emerging
markets are faced with a challenging environment as they directly
suffer the consequences of the Chinese slowdown, as well as
possible further reversals of the large investor inflows they have
benefited so greatly from in recent years.
Market Overview
Markets calmed in July as rhetoric surrounding Fed "tapering"
moderated, benefitting risk assets. The month began with the Bank
of England and European Central Bank surprising markets with dovish
policy statements, while Fed Chairman Bernanke commented that the
US economy still needed "highly accommodative" monetary policy for
the "foreseeable future". In Asia, the much anticipated result of
the Upper House election in Japan gave the ruling part the majority
expected and the government upgraded its economic outlook for the
third straight month. In China, Premier Li promised to seek
economic growth, employment and inflation within limits, avoiding
"wide fluctuations", though weaker manufacturing data in the region
renewed concerns over a slowdown in China.
Global equity markets, led by Europe, generally appreciated in
July. The Euro Stoxx 50 Index rose more than 6% boosted by a dovish
ECB and several positive economic reports, including an unexpected
expansion in European manufacturing and rising German business
confidence. This occurred despite the emergence of new tensions in
the eurozone as Italy and France's debt was downgraded and
Portugal's finance and foreign ministers both resigned amid
dissention over the country's austerity measures. In the US, the
S&P benefitted from Bernanke's attempt to distinguish between
tapering of quantitative easing and tightening of monetary policy.
The Nikkei finished slightly down for the month after reversing
sharply late in the month in response to a stronger yen and as
concerns for a slowdown in China impacted export stocks. Managers
have long exposure to US, Japanese and European equities based on
the explicit pursuit of reflationary policies by Central Banks
and/or positive economic data.
Government bonds were mixed in July; US yields continued to
rise, while yields in the UK, Germany and Japan declined during the
month. US rates saw a sharp rise early in the month following a
stronger than expected employment report, reinforcing expectations
of QE tapering in September. However, later in the month,
Bernanke's comments emphasising that the phasing out of QE does not
imply earlier-than-expected rate hikes resulted in a rally in bonds
through much of the rest of the month. In the UK and Germany, the
decline in rates was more pronounced as both the Bank of England
and European Central Bank signalled early in the month that rates
would remain accommodative. Peripheral European bond yields
increased somewhat amid renewed concerns for the economic health of
those countries following a fresh round of debt downgrades. In the
US, managers are short US treasuries in light of continued solid
economic data and have exposure to eurodollar curve steepeners. In
Europe, managers maintain long positions along the euro curve as
the region remains in a rather precarious economic situation. In
emerging markets, the picture is more mixed. Certain managers
maintain long exposures in markets they feel are oversold and where
fundamentals still warrant such exposures, while others hold shorts
in countries susceptible to further liquidation should there be
another rapid surge in US yields. In Japan, the bias is to be short
Japanese government bonds.
Despite the relative strength of the US economy, appetite for
the US dollar sharply reversed during the month on the back of
dovish comments from Chairman Bernanke, which eased tapering
concerns, resulting in US dollar weakness against the euro and
Japanese yen. Commodity currencies, such as the Canadian and New
Zealand dollar, also rallied sharply against the US dollar during
the month on the back of rising commodity prices. However, the
Australian dollar was a notable standout, falling over 2% against
the US dollar as a result of expectations for further easing, as
well as slowing external demand. Managers typically maintain a long
US dollar bias based on the different monetary policy path adopted
by the Fed versus other major central banks. They are trading this
position far more tactically than in previous months, however, as
the trade has become reasonably crowded. Short exposure tends to be
held in commodity currencies given the continued pressure on the
asset class. Managers also maintain shorts in the Japanese yen,
believing that the reflation trade has further room to run; in the
euro, based on eurozone economic weakness; and the Swiss franc, due
to reduced safe haven flows.
In commodities, crude oil prices surged as renewed turmoil in
Egypt intensified supply disruption concerns and US inventories
were lower than expected. Natural gas prices initially jumped as US
inventories were considerably weaker than expected, but ultimately
finished lower as milder weather across the US reduced power
demand. Gold prices climbed sharply on the likelihood for continued
quantitative easing. Base metals prices finished higher after a
positive US jobs report and an unexpected rise in second quarter US
GDP data. In agricultural commodities, corn prices fell to a two
and a half year low in anticipation of healthy crop yields due to
favourable weather conditions in the US Midwest. Whilst light,
exposure is generally expressed through short gold positions.
Strategy Overview
Discretionary: -0.23%. This group of managers suffered a
marginal loss on the month. Losses stemmed primarily from the
currency sector and were driven by long US dollar positioning
versus a variety of currencies, particularly against developed
market counterparts such as the yen, euro and Swiss franc.
Additional small losses came from being short gold. These losses
offset gains from long equity exposure, namely in the US and
Europe, as well as profits from shorts in the fixed income sector,
particularly the US 10 year.
Systematic: -2.33%. The difficult environment for systematic
managers continued in July with losses amongst trend and non-trend
following managers alike. Within the trend following sectors,
losses continued to be driven by long positions in the fixed income
sector. Currencies also detracted from performance as the Japanese
yen appreciated during the month. Among non-trend following
managers, losses were due primarily to short positions in commodity
currencies as well as short front-end positions in the US.
Natural resources: +3.12%. Following a difficult period for
gold, managers with long positions benefitted from the sharp rally
in precious metals and related equities during the month. In
addition, managers were also able to capitalise on the rise in oil
prices.
Relative value arbitrage: +3.16%. Fundamental managers
benefitted from the strong run of equity prices during the
month.
Strategy Allocation Number of Performance by
as of 31 July managers as strategy %
% of
31 July
-------------------------- --------------- ------------- -----------------
July YTD
-------------------------- --------------- ------------- -------- -------
Discretionary(1) 62 19 -0.23 +8.05
-------------------------- --------------- ------------- -------- -------
Natural resources 5 8 +3.12 -7.43
-------------------------- --------------- ------------- -------- -------
Relative value arbitrage 7 3 +3.16 +9.42
-------------------------- --------------- ------------- -------- -------
Systematic(1) 19 7 -2.33 -4.64
-------------------------- --------------- ------------- -------- -------
Cash 7 - - -
-------------------------- --------------- ------------- -------- -------
Total 100 36(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 PMH's fees
and expenses.
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/0186M_-2013-8-19.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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