June Net Asset Value


 

TIDMDTL 
 
RNS Number : 3925P 
Dexion Trading Limited 
15 July 2010 
 

Dexion Trading Limited ("the Company") 
 
June Net Asset Value 
 
The net asset value of the Company's Shares as of 30 June 2010 is as follows:- 
 
GBP Shares 
 
+------------+-------------+-------------+ 
|    NAV     |    MTD      |    YTD      | 
|            |Performance  |Performance  | 
+------------+-------------+-------------+ 
|  129.30    |   -0.68%    |   -0.95%    | 
|   pence    |             |             | 
+------------+-------------+-------------+ 
 
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 
The Portfolio's managers are increasingly bearish on the outlook for global 
growth, including prospects for the US, regardless of economic data reporting 
continued weakness in the US housing and employment sectors. Global central 
banks have used and will continue to use the wide range of tools at their 
disposal to prevent a global recession, although stress and volatility will 
remain dominant factors until the European Central Bank is able to stabilise 
their credit markets. 
 
Market Overview 
Market sentiment in June continued to be dominated by concerns over sovereign 
debt issues in Europe and its potential impact on the global recovery. Mixed US 
economic data reports added to these fears, with the US employment report early 
in the month proving disappointing as fewer than expected jobs were created. 
Furthermore, US retail sales declined and domestic housing market data also 
proved disappointing, with new home sales plummeting 33.3% to a record low 
following the expiration of the homebuyers' tax credit in April. Manufacturing 
in the US continued to rally, with strong results in industrial production 
figures and auto sales. At the Federal Open Market Committee meeting on the 23 
June 2010, the Federal Reserve reiterated that rates would remain exceptionally 
low for an extended period, and stressed that the pace of economic recovery is 
likely to be moderate for a time. In Europe, high unemployment and weak economic 
sentiment continued to dominate. Sovereign debt issues remained as Hungary also 
showed possibilities of default and Greek debt was once again downgraded by 
Moody's. In the UK, the new Government announced more significant austerity 
measures during the month, raising expectations that the Bank of England would 
maintain low rates for longer. In Asia, some reports claimed that Chinese 
exports rose approximately 50% from the previous year and imports also rose, 
extending optimism around China's economic growth. 
 
Equity markets continued to decline in June, with the MSCI World index falling 
nearly 7.0%. In the US, equities fell at the start of the month given 
disappointing employment reports and general worries over the situation in 
Europe. Most losses were recovered as Fed Chairman, Bernanke, indicated that the 
US economy would be unlikely to experience another downturn. Stocks also rose 
following increased Chinese export figures and improved consumer sentiment. 
However, optimism was short-lived and US stocks fell sharply at the end of the 
month following reports of a decline in new and existing home sales and a 
downward revision to first quarter GDP. Europe also experienced losses, with 
stocks declining amid default risk faced by Hungary. However, there was a sharp 
recovery following the European Central Bank's ("ECB") decision to hold interest 
rates steady, as well as successful Eurozone bond auctions. Japanese stocks 
ultimately ended the month lower as the Yen's appreciation weighed on several 
major exporters. Positioning in equities among the Portfolio's managers tends to 
be mixed and overall there is not a large amount of equity exposure. 
Nevertheless, some managers within the Portfolio are long equities, particularly 
in emerging markets given the strong fundamentals, while other managers choose 
to be short equities with the view that the global recovery is slowing and the 
future for corporate profits is uncertain. 
 
Fixed income yields generally declined following continued fears over the global 
economic recovery, although elevated levels of uncertainty and funding issues 
resulted in increasing Libor rates. In the US, 2-year treasury yields dropped to 
a record low of 0.61%, driven by safe-haven buying and investor expectations 
that the Federal Reserve would keep interest rates on hold for an extended 
period. The 10-year treasury yield also fell dramatically, resulting in a 
flatter yield curve, as the market began to discount potentially weaker US 
economic data. The long end of the European yield curve benefited from the 
aggressive buying of European bonds by the ECB. Weakness in the US data 
reinforced the "lower for longer theme," which continues to be a popular fixed 
income trade among many of the Portfolio's managers. In addition, as fears have 
recently shifted from inflationary to deflationary concerns, managers are 
building long positions at the back of the US yield curve. They are, however, 
trading this position cautiously, as inflation fears could quickly return with a 
few positive data points. Outside of the US, managers continue to be long bonds 
in selected countries such as Australia, Canada and Norway due to favourable 
fiscal characteristics. In addition, managers are bullish sovereign emerging 
market debt given attractive yields. 
 
Notably, on June 19, the People's Bank of China announced that they were 
altering their exchange rate practices, dropping the 2-year peg to the US 
Dollar. Many skeptics found the timing of the announcement, just prior to the 
start of the G20 summit in Canada, politically convenient. The US Dollar rallied 
versus the Euro, however this trend reversed early on and the Euro pushed higher 
for much of the month. This was largely due to increasing risk-appetites 
following the news regarding China's exports and the ECB's upward revision to 
its 2010 growth forecast. These gains were partly offset towards the end of the 
month amid concerns about the ECB's decision not to renew twelve month loans, a 
move that limits some Eurozone banks' access to liquidity. The Japanese Yen 
appreciated steadily against the US Dollar, while commodity currencies 
oscillated during the month given fluctuations in risk-appetite, ending the 
month flat. Though the US Dollar has been a major beneficiary of safe-haven 
buying over the past several months, the potential for slower growth and 
continued low rates has reduced the attractiveness of the US Dollar. However, 
managers tend not to be short the US Dollar against the Euro, as the latter is 
also likely to continue to weaken. On the other hand, growth currencies in 
countries experiencing current account surpluses and/or those that will undergo 
rate hikes are likely to benefit from the decline in the US Dollar and Euro. As 
such, selected managers hold long positions in the Norwegian Krone, Swedish 
Krona, Canadian Dollar, Korean Won, Mexican Peso and Indian Rupee. 
 
The natural resources sector was mixed in June, driven by macro-economic 
challenges, including the European debt crisis, weaker global economic data and 
uncertainty surrounding the Gulf of Mexico oil spill. The energy sector posted 
positive returns, although a sell-off towards the end of the month muted overall 
gains. Energy equities continued to decline largely due to the uncertainty 
surrounding future permitting procedures for offshore drilling and the 
likelihood of higher production costs. Base metals were also down, while 
precious metals posted small gains on safe-haven buying. Agricultural and 
livestock prices were generally higher during the month, driven by strong gains 
in sugar and coffee. Macro-economic concerns are likely to continue driving the 
natural resources sector over the short-term until there is greater clarity 
surrounding global economic growth. Over the long-term, the Portfolio's managers 
maintain a positive view of the sector given attractive supply and demand 
fundamentals. The long-term view is reinforced by recent events, which have 
increased the cost of production of many commodities. 
 
Strategy Overview 
Discretionary: +0.27%. Positive contributors to performance returns included the 
US yield curve flattening and European sovereign credit trades. Long positions 
in emerging market bonds, in particular Mexico, also added to returns in the 
fixed income sector. Performance in the currency sector was more mixed, with 
gains coming primarily from tactical trading in commodity currencies such as the 
Australian Dollar. The Euro's rally during part of June was a performance 
detractor for many managers who were short the currency. 
 
Systematic: -1.15%. Returns among the Portfolio's managers were widely dispersed 
even within the trend following and non-trend following sub-strategies. One 
trend following manager who performed particularly well benefited from long 
positions in US bonds as treasuries continued to trend higher. A profitable 
trade for one of the non-trend following managers was long the Swiss Franc 
versus the US Dollar. Losses among trend followers generally resulted from long 
equity positions. On the other hand, the Portfolio's non-trend following 
managers suffered from long equity index futures in Australia and the UK as well 
as from US yield curve steepening positions as the curve flattened during the 
month. 
 
Natural Resources: -1.72%. Although long positions in gold were profitable 
during the month, gains were offset by long positions in energy-related 
equities. 
 
Relative Value Arbitrage: -0.89%.Equity market neutral strategies continued to 
be significant detractors of performance, amid high volatility and frequent 
reversals in the equity markets. Fixed income arbitrage strategies also posted 
marginal losses. 
 
+-------------------+--------------+-----------+--------+--------+ 
| Strategy          |Allocationas  |Number of  | Performance by  | 
|                   |  of30 June   | Managers  | Strategy%       | 
|                   |      %       | as of 30  |                 | 
|                   |              |   June    |                 | 
+-------------------+--------------+-----------+-----------------+ 
|                   |              |           |  June  |  YTD   | 
+-------------------+--------------+-----------+--------+--------+ 
| Discretionary*    |      56      |    26     |  0.27  |  2.06  | 
+-------------------+--------------+-----------+--------+--------+ 
| Natural Resources |      9       |    12     | -1.72  | -2.89  | 
+-------------------+--------------+-----------+--------+--------+ 
| Relative Value    |      5       |    4      | -0.89  | -0.28  | 
| Arbitrage         |              |           |        |        | 
+-------------------+--------------+-----------+--------+--------+ 
| Systematic*       |      25      |    9      | -1.15  | -0.38  | 
+-------------------+--------------+-----------+--------+--------+ 
| Cash              |      5       |    -      |   -    |   -    | 
+-------------------+--------------+-----------+--------+--------+ 
| Total             |     100      |    50*    |        |        | 
+-------------------+--------------+-----------+--------+--------+ 
 
* Discretionary and Systematic have one manager in common. 
 
Strategy returns are in US$ and net of underlying manager fees only, and not 
inclusive of Dexion Trading's fees and expenses. 
 
Voting Rights and Capital 
 
The Company's share capital consists of 101,213,549 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/3925P_-2010-7-15.pdf 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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