TIDMDTL
RNS Number : 8411Z
Dexion Trading Limited
12 March 2013
Dexion Trading Limited (the "Company")
February Net Asset Value
The net asset value of the Company's Shares as of 28 February
2013 is as follows:-
GBP Shares
NAV MTD Performance YTD Performance
-------------- ---------------- ----------------
137.44 pence -0.52% +1.73%
-------------- ---------------- ----------------
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 continue to hold a constructive view of the global
economy and generally remain in favour of risk assets. In the US,
the economy continues to improve, with positive momentum still
being supported by the Federal Reserve's accommodative policy.
However, some managers warn that the fiscal drag, as a result of
the increase in income taxes and the expiry of the payroll tax cut,
is likely to be a small negative influence on growth. Although
European political events, such as the Italian election and
discontent over austerity measures, are likely to surface
sporadically, the region has largely resolved its liquidity crisis
and a breakup of the union looks unlikely. The Investment Adviser
believes that there will continue to be increased economic
dispersion between the various economies, with France, for example,
continuing to suffer from poor fundamentals and weak reforms. In
the UK, growth is likely to remain anaemic, coming under pressure
as a result of weak wage growth and fiscal austerity. In Japan, the
new government remains on track to curtail the country's
deflationary trajectory via a gradual depreciation of the yen. In
China, the government will continue to stimulate economic activity
and positive growth momentum is expected to continue for the first
few months of the year. The environment, however, is more
challenging today than it was in 2009 due to several weaknesses in
the system, notably the excessive credit creation. Nevertheless,
China is ultimately a positive contributor to the world
economy.
Market Overview
January's risk asset rally became subdued in February as markets
grappled with mixed data. The month started with a rise in the US
unemployment rate to 7.9%, giving risk assets a boost as
expectations that the Federal Reserve would bring an early end to
monetary easing waned; however, the release of Federal Open Market
Committee ("FOMC") minutes towards month-end led markets to the
opposite conclusion. Although economic data in the US was generally
better than expected, concerns over the coming sequestration
weighed on markets. Europe continued to drag down market sentiment
as the region's Q4 2012 GDP contracted at its fastest rate in
nearly four years, coupled with the announcement from the European
Central Bank ("ECB") that the second round of LTRO repayments would
be significantly lower than forecast. In addition, the stalemate in
the Italian elections served to further increase anxiety.
Equity markets ended the month slightly higher, with the MSCI
World (USD) returning 0.2%. Emerging market stocks underperformed
developed markets, which were once again led by Japan, with the
Nikkei returning 3.8%. Developed market equities (with the
exception of stocks in the EMU) climbed higher for much of the
month, driven by positive economic reports in the US. However,
towards month end, prices reversed sharply following the release of
the FOMC minutes. Prices declined further as the Italian election
results showed no decisive winner, bringing eurozone concerns to
the forefront once more. In the final trading days of the month,
positive economic data and solid US earnings outweighed the
uncertainty over the Italian election and stocks posted a sharp
rebound back to positive figures. In the emerging markets, prices
declined throughout most of the month led by China, as the People's
Bank of China tightened policy.
Most discretionary managers believe that the US economic
recovery will be underpinned by continued accommodative monetary
policy and robust economic data. In addition, a rotation from bonds
into equities, where investors are still generally
under-positioned, has yet to occur. Both of these developments are
likely to support equity prices. The outlook is also positive in
Japan, where stocks are expected to be buoyed by a weaker yen, as
well as China and the emerging markets, where the economic picture
has improved.
After January's decline, developed market bond prices once again
resumed their longer term uptrend. Yields were generally flat,
trading in a tight range for most of the month; however, concerns
over sequestration spurred safe haven buying towards month end,
while the Federal Reserve Chairman Ben Bernanke's testimony to
Congress reiterated that monetary easing would persist until the
employment picture improved further, benefiting treasury prices. In
Europe, German yields fell sharply on the back of reignited fears
over the eurozone crisis, while peripheral yields widened
marginally, led by Italy. In terms of manager positioning, in the
US, given managers' relatively strong views on the economy, the
bias is to be short rates in the 10 year sector, whereas in Europe,
managers generally maintain long positioning in European rates due
to relatively poor growth prospects. In Japan, certain managers
have small shorts in Japanese government bonds as an expression of
the "reflation trade". Emerging market-focused managers have short
exposure in markets where they believe the bond rally has
overshot.
"Currency wars" dominated headlines in the foreign exchange
market during the month as the G20 made the unprecedented decision
to issue a communiqué that effectively pledged not to engage in
devaluations to gain comparative advantage, essentially turning a
blind eye to the practice. The Japanese yen declined for the fifth
straight month against the US dollar, although the rate of decline
slowed on the back of comments from Japan's finance minister that
the yen's recent decline may have been too rapid. Sterling also
traded sharply lower against the US dollar, falling 4.4% as a
result of speculation that the Bank of England may initiate further
monetary easing and as Moody's downgraded the UK's sovereign rating
one notch from Aaa to Aa1. The euro declined 3.8% against the US
dollar amid growth concerns in the region and a warning from Mario
Draghi that the recent appreciation of the euro could undermine the
region's recovery, fueling speculation of ECB rate cuts. The US
dollar advanced against most commodity currencies as commodity
prices fell throughout the month. Managers continue to be short the
Japanese yen, believing that reflation is continuing and will be
achieved through currency depreciation. Managers are tactically
trading the euro against the US dollar, with some holding a short
bias given poor economic data. On the emerging market front, they
are long those currencies with favourable yields and relatively
strong supporting fundamentals, such as the Mexican peso.
The commodity sector had a negative month with the Dow Jones-UBS
Commodity Index falling 4.1% and the S&P North American Natural
Resources Sector Index losing 1.5%. In the equities space,
energy-related equities produced mixed performance as the oil
services sector was broadly lower, but select exploration and
production companies, as well as master limited partnerships,
finished higher. Gold equities fell during the month, particularly
small-cap gold miners, as the sector continued to come under
pressure. In the commodities space, crude oil prices fell as
eurozone concerns resurfaced, along with potential US federal
spending cuts. Crude oil prices also moved lower as Chinese
manufacturing data was weaker than expected. Natural gas prices,
however, climbed strongly during the last week of February (the
first monthly gain since October 2012) on the back of forecasts for
colder US temperatures. In the metals sector, gold prices finished
lower for the fifth consecutive month, experiencing the longest run
of monthly declines in 16 years as US economic data largely
improved. Base metals prices fell sharply, particularly in copper,
as Chinese demand softened and inventory stocks rose. Manager
exposure to commodities, whilst light, is dominated by long
positions in energy, based on highly accommodative policy.
Strategy Overview
Discretionary: +0.19%. The developed market-focused managers
continued to register gains this month from the "Japan trade"
(being short the yen and long the Nikkei) although it proved to be
quite a volatile trade, with the Japanese yen reaching 94.3 against
the US dollar before retracing back to 91.8 and ultimately ending
the month at 92.6. Many also profited from being short sterling,
with a struggling UK economy and dovish policy being amongst the
various factors to exert downward pressure on the currency. The
fixed income sector was also marginally accretive as longs along
the euro curve, which proved punishing in January, added to gains
in February. Gains in the sector were slightly offset by longs in
European peripheral bonds and shorts in Japanese government bonds,
and by emerging market-focused managers who lost on long emerging
market currency (e.g. the Indian rupee) and equities (e.g. in
Brazil, India and China).
Systematic: -2.05%. Losses were largely driven by non-trend
managers who suffered from the reversal in bond prices. In
addition, long euro and Japanese yen positions also hurt
performance. On the trend following side, performance was more
diversified: managers posted losses from long energy positions,
although much of these losses were offset by gains in equities and
bonds, as many managers continued to hold long positions amid the
longer term uptrend.
Natural resources: -1.28%. Losses derived mostly from gold and
gold-related equities, with the improving global picture leading to
selling pressures. Long oil positions further contributed to the
month's performance.
Relative value arbitrage: +1.30%. Managers continued to post
steady returns as stock performance in February was driven more by
company fundamentals than macro developments.
Strategy Allocation Number of Performance by
as of 28 February managers as strategy %
% of
28 February
-------------------------- ------------------- ------------- -----------------
February YTD
-------------------------- ------------------- ------------- --------- ------
Discretionary(1) 60 22 +0.19 +3.10
-------------------------- ------------------- ------------- --------- ------
Natural resources 7 8 -1.28 +0.75
-------------------------- ------------------- ------------- --------- ------
Relative value arbitrage 7 3 +1.30 +5.12
-------------------------- ------------------- ------------- --------- ------
Systematic(1) 21 9 -2.05 -0.08
-------------------------- ------------------- ------------- --------- ------
Cash 5 - - -
-------------------------- ------------------- ------------- --------- ------
Total 100 41(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/8411Z_-2013-3-12.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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