TIDMDTL
RNS Number : 4870V
Dexion Trading Limited
13 December 2013
Dexion Trading Limited (the "Company")
November Net Asset Value
The net asset value of the Company's Shares as of 29 November
2013 is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
138.44 pence +1.37% +2.47%
-------------- ---------------- ----------------
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
The US economy continues to improve - the strength of the
recovery being a key determinant of the global economic outlook -
while also providing some indication of the Fed's timing for
tapering. While the Fed has been keen on outlining the difference
between tapering and outright rate hikes, the recent strength in
payroll numbers may bring forward the timing for tapering. In
Europe, the ECB needs to maintain an accommodative policy in light
of the region's fragile, albeit slowly improving, growth outlook
and subdued inflation. ECB President Mario Draghi has in fact
reaffirmed that interest rates will need to stay "lower for longer"
in light of a reduction in the ECB's inflation forecasts. This
backdrop essentially leaves the door open for additional policy
measures in the eurozone, including the possibility of negative
deposit rates or asset purchases. In Japan, the authorities remain
very much inclined to pursue their aggressive policy drive to boost
Japanese economic growth and achieve their 2% inflation target.
This impetus should result in a further weakening of the Japanese
yen which would help Japanese stocks. Indeed, the BoJ's willingness
to pursue its policy measures is bearing fruit once more and the
"Japan trade", which after a strong start in 2013 had lost some of
its momentum, now appears to be back on track.
Market Overview
November was generally positive for risk assets on the back of a
series of economic and political events. Early in the month, Janet
Yellen's confirmation hearing served to reassure markets that the
Fed will maintain accommodative monetary policy under her
leadership, although later expectations that the Fed would begin
tapering before year-end were reignited. In Europe, the ECB cut its
benchmark rate to a record low in an effort to ease stagflation
concerns, while in the UK the BoE announced plans to end its
Funding for Lending Scheme in an effort to cool the housing market.
In Asia, Japan's government indicated that they would not rule out
currency intervention, while China announced new reform measures,
including allowing more private investments into state-controlled
industries and services, at its Third Plenary session in
mid-November. On the political front, Iran and six major powers
agreed on a historic deal to freeze key parts of Iran's nuclear
programme in exchange for temporary relief of certain economic
sanctions.
Major global equity markets finished the month higher. Despite
intermittent concerns that the Fed may curtail its asset purchasing
program before the year end, US equity markets climbed on a number
of positive US economic data points and assurances from Yellen that
the Fed's accommodative monetary policies would remain intact under
her leadership. European equity markets initially fell as the
health of the eurozone economy was called into question amidst
lower-than-expected GDP figures, a credit rating downgrade for
France and news of possible year-end Fed tapering. However, an
unexpected interest rate cut by the ECB, expectations of continued
accommodative monetary policies, as well as strengthening
employment and consumer sentiment data drove European equity
markets upward. Asian equity markets moved higher on news of
Chinese reform proposals, a weakening Japanese yen and expectations
that the BoJ would continue its accommodative monetary policies. A
backdrop of generally accommodative policy has created a favourable
environment for equities. Managers are generally positioned long,
particularly in Japanese equities but also in US positions as a
result of solid economic data, and in European equities based on
improving growth prospects. Emerging market focused managers also
favour long emerging market equities, where current growth levels
remain strong, as well as being long cyclical stocks that stand to
benefit from China's new consumption orientated Chinese growth
model.
The JP Morgan Global Government Bond Index (local currency) was
down marginally in November, while the yield on 10-year US
treasuries ended the month higher on expectations of Fed tapering,
with some market participants believing tapering would start before
year end on the back of improving economic data. Likewise, the
European yield curve steepened as the unexpected interest rate cut
led to rallies at the front end, but had little impact on the long
end. The Merrill Lynch High Yield Master II Index (a high yield
bond index) was up while the JPMorgan EMBI+ Index finished lower.
In the US, managers continue to trade rates very tactically with an
increasing short bias in light of strong US economic data. In
Europe, despite stabilisation in growth and an increased appetite
for European assets, the eurozone nonetheless remains precariously
placed and beset by low inflation. As such, the bias is to maintain
long exposure along the curve.
In commodities, WTI crude oil prices moved lower on increased US
inventories. Natural gas prices moved markedly higher as colder
weather swept across the US. Gold prices fell on a stronger US
dollar and positive US economic data releases. Base metals prices
also moved lower, with copper prices falling on news of rising
production. Agricultural commodity performance was mixed, with corn
and wheat prices falling on higher-than-expected yields, while
soybean prices climbed as the USDA lowered 2014 stockpile estimates
and Chinese demand increased. Whilst light, exposure is generally
expressed through short gold and long energy.
The US dollar rallied in November, gaining against most
developed and emerging market counterparts - the notable exception
was sterling - on tapering expectations before year end. Sterling
reached a two-year high against the US dollar at month end amid a
more hawkish tone from the BoE. The Japanese yen continued its
decline in November following comments from Finance Minister Aso
and members of the BoJ promising further intervention to help to
reverse deflation in the economy. The Australian dollar was the
second worst performing G7 currency after the Reserve Bank of
Australia significantly downgraded its growth and inflation outlook
and maintained an easing bias. In the currency space, long exposure
to the US dollar against Japanese yen continues to be a very high
conviction position in light of the BoJ's pursuit of quantitative
easing. Managers also favour long positions in sterling as a result
of the strongly rebounding UK economy.
Strategy Overview
Discretionary: +1.48%. Gains for this strategy were widespread
across asset classes during the month. Managers profited from long
exposure to developed market stocks, in particular in Japan and the
US. In fixed income, gains were registered from long exposure to
the euro curve, more specifically the front end. In currencies, a
long US dollar bias proved lucrative, particularly against the
Japanese yen but also against certain emerging market currencies.
Being long sterling also paid off. Commodities added modestly to
profits.
Systematic: +1.54%. Trend followers continued to benefit from
positive momentum in equity markets. Additional gains were also
generated by being short precious metals, short Japanese yen and
long sterling. Non-trend following managers also performed well on
the back of steepening positions in US fixed income, as well as
currency positions, including short New Zealand dollar, Canadian
dollar and Swedish krona, and long sterling.
Natural resources: -1.64%. Losses were driven by long positions
in gold and gold-related equities, as well as long positions in
crude. Some of the losses were offset by profits in trading
agricultural commodities on both the long and the short side.
Relative value arbitrage: +0.18%. Fundamental equity strategies
benefited from the continued rise in equity markets, while a
portion of the gains were offset by statistical arbitrage
strategies.
Strategy Allocation Number of Performance by
as of 29 November managers as strategy %
% of
29 November
-------------------------- ------------------- ------------- ------------------
November YTD
-------------------------- ------------------- ------------- --------- -------
Discretionary(1) 66 20 +1.48 +9.16
-------------------------- ------------------- ------------- --------- -------
Natural resources 5 9 -1.64 -11.06
-------------------------- ------------------- ------------- --------- -------
Relative value arbitrage 8 3 +0.18 +9.41
-------------------------- ------------------- ------------- --------- -------
Systematic(1) 17 9 +1.54 -5.65
-------------------------- ------------------- ------------- --------- -------
Cash 4 - - -
-------------------------- ------------------- ------------- --------- -------
Total 100 40(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/4870V_-2013-12-13.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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