TIDMDTL
RNS Number : 7817V
Dexion Trading Limited
17 January 2013
Dexion Trading Limited (the "Company")
December Net Asset Value
The net asset value of the Company's Shares as of 31 December
2012 is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
135.10 pence +1.84% +0.92%
-------------- ---------------- ----------------
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 12th March 2008.
Monthly Portfolio Review
Investment Adviser Portfolio Outlook
Managers have a reasonably optimistic outlook on the US. With
the "fiscal cliff" debacle avoided, the focus can now turn to the
economic data which has been encouraging, particularly with regards
to employment and wage growth. This should contribute to a more
favourable environment for risk assets whilst having bearish
implications for government bonds. In Europe, the growth outlook
remains weak despite a recent improvement in certain economic data
points (e.g. the German ZEW survey), as austerity measures will
only weigh further on the already fragile growth environment. The
political picture also remains quite complex and some managers
continue to express scepticism towards the eurozone rescue plans.
In Japan, the new government appears on track to implement further
monetary easing to stimulate the economy, in addition to a
continued push for adjustments to the inflation target to curtail
Japan's deflationary trajectory. These measures are likely to
result in a further weakening of the yen and, as such, this remains
a reasonably high conviction trade for many of the portfolio's
discretionary macro managers. In China, the data appears to be
improving, as shown by the recent release of the November PMIs.
Market Overview
The global economy showed moderate signs of growth in December,
led by the US, which delivered a better-than-expected employment
report at the start of the month and an upward revision to the
third quarter GDP figure. Chinese economic activity also increased
and there was even positive news out of Europe as eurozone
sentiment data improved slightly during the fourth quarter, with a
strong rally in the German ZEW survey. Hanging over these positive
developments, however, was the lack of a clear resolution to the US
budget negotiations, which weighed on market sentiment.
Global equity markets rose during the month, although the 0.9%
increase in the S&P 500 was relatively muted (held back by the
US "fiscal cliff" negotiations) against other developed market
indices, with the MSCI Europe (EUR) up 1.4% and the Nikkei 225 up
10.1%. In Europe, equity performance was driven in the first half
of the month by the EU approving the release of Greece's latest
bailout tranche which encouraged buying, whilst in Japan, strong
returns in equities derived from continued weakness in the Japanese
yen and a new government committed to further monetary easing.
Emerging market equities performed well, with the MSCI EM Index
(local currency total return) up 4.0% for the month. This was led
by Chinese equities, with the Shanghai SE Composite Index up 14.6%
as Beijing policymakers reiterated their commitment to urbanisation
and domestic consumption. Looking forward, most discretionary
managers believe that the US economic recovery will be underpinned
by continued accommodative monetary policy, which, in turn, is
supportive of equity prices. The outlook is also positive in Japan,
where stocks will be buoyed by a weaker Japanese yen, and in China,
where the economic picture has improved.
Developed market bonds produced mixed results in December, with
yields in the US, UK and Japan rising while yields in Germany fell.
As central banks showed greater tolerance towards higher inflation
in exchange for a more sustainable growth picture, there were
significant sell-offs at the long end of the curves, resulting in
curve steepening as front end rates remained relatively unchanged.
In Europe, bond prices rose sharply early in the month as both the
ECB and the Bundesbank cut GDP forecasts for the eurozone,
resulting in safe haven buying and ultimately lower yields during
the month. Peripheral spreads were generally stable with the
exception of Greece, where yields declined amid the release of
bailout funds. In the US, given the portfolio managers' relatively
strong views on the economy, the bias is to be short rates in the
ten year sector, whilst in Europe, managers are maintaining their
long positioning in European rates due to the continued economic
concerns, as well as the unlimited central bank liquidity to keep
rates at low levels. Emerging market managers are cognisant that
the rally in emerging market credit has been pronounced and, in
some cases, overstretched; as such, they are short rates in certain
countries, compared with 2012 when the bias was to be almost
universally long.
The Japanese yen continued to dominate the foreign exchange
market in December, declining nearly 5% against the US dollar and
more than 6% against the euro. As widely expected, the Liberal
Democratic Party won the Japanese elections in a landslide victory,
giving new Prime Minister Abe the power to deliver a significant
policy response to stimulate the economy, weaken the yen and
ultimately try to end the deflation spiral. With the exception of
the yen, the US dollar generally ended the month lower against
developed market counterparts, weighed down by the "fiscal cliff"
uncertainty. Performance versus commodity and emerging market
currencies was mixed, with the US dollar ending the month higher
versus the Australian dollar, Canadian dollar and most ex-Japan
Asian currencies, and lower against the Brazilian real, New Zealand
dollar and Korean won. Managers continue to be short the Japanese
yen, believing that the cycle of "reflation" in Japan is continuing
and will be achieved through yen depreciation. They are generally
short the euro against the US dollar but are positioning this trade
in a tactical manner as they acknowledge that the market appetite
is not yet fully aligned to push the euro lower. On the emerging
market front, they are long those currencies with favourable yields
and relatively strong supporting fundamentals, such as the Mexican
peso, Brazilian real and Russian ruble.
Commodities ended the month lower, the Dow Jones-UBS Commodity
Index falling 2.6%, while natural resource-related equities were
relatively flat, with the S&P North American Natural Resources
Sector Index up 0.8%. Crude oil prices rose during the month
following positive US and Chinese economic data, although markets
were volatile as risk sentiment shifted on the back of US "fiscal
cliff" developments. Natural gas prices fell for a second
consecutive month as a result of milder weather across the US.
Grains also declined, with wheat prices falling 7.9% and corn
prices falling 6.7% due to rising supplies and slowing overseas
demand. Gold and silver prices ended the month lower on the back of
reduced safe haven demand as US economic data was generally
positive. Commodities exposure, whilst light, is dominated by long
positions in the agricultural sector, due to the attractive
supply/demand fundamentals, as well as long positions in energy,
based on highly accommodative policy.
Strategy Overview
Discretionary: +2.91%. Strong gains were widespread across asset
classes with the exception of commodities. In currencies, shorting
the Japanese yen against the US dollar and, to a lesser extent the
euro, provided the main source of positive returns, whilst in
equities, gains resulted from long positioning across Asian,
European and US indices. Long nikkei exposures proved particularly
profitable, with further gains coming from long positioning in
emerging market currencies, such as the Russian ruble and the
Mexican peso, along with some Eastern European currencies. Profits
also derived from the fixed income sector and were driven by
Europe, led by long positioning along the euro curve as well as in
Greek bonds, which rallied strongly during the month. Short
positioning in US treasuries contributed additional positive
returns.
Systematic: +1.46%. Performance among the trend following
managers was dominated by gains in currencies and equities,
resulting in strong returns despite small losses in other asset
classes. Profits derived from short positions in the Japanese yen
and Australian dollar, along with long positions in Asian and
European equities. Non-trend following performance, however, was
generally disappointing amid sharp losses from long yen
positions.
Natural resources: +0.33%. Profits came from long positions in
crude oil, although gains were somewhat muted due to losses from
long positions in gold and gold related equities.
Relative value arbitrage: +1.05%. All underlying managers were
profitable during the period, with returns driven particularly by
fundamental stock picking.
Strategy Allocation Number of Performance by
as of 31 December managers as strategy %
% of
31 December
-------------------------- ------------------- ------------- -----------------
December YTD
-------------------------- ------------------- ------------- --------- ------
Discretionary(1) 58 22 +2.91 +6.85
-------------------------- ------------------- ------------- --------- ------
Natural resources 8 10 +0.33 +0.55
-------------------------- ------------------- ------------- --------- ------
Relative value arbitrage 6 3 +1.05 +2.86
-------------------------- ------------------- ------------- --------- ------
Systematic(1) 21 10 +1.46 -2.30
-------------------------- ------------------- ------------- --------- ------
Cash 7 - - -
-------------------------- ------------------- ------------- --------- ------
Total 100 44(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/7817V_-2013-1-17.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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