2nd Mar 2016 11:25
LONDON (Alliance News) - City Natural Resources High Yield Trust PLC Chairman Geoff Burns on Wednesday said equity prices should eventually break their lock-step with low oil prices.
"The strange correlation between the oil price and equities (strange given the very different effects low oil prices have on different economies) will also need to break. A sustained low oil price should start to stimulate global demand, and at that point the non-oil resources sector should be released, along with other demand sensitive equities," Burns said.
"Given the attrition in this sector it is our expectation that we would be an early beneficiary of this. In the meantime we are cautiously moderating our previous defensive positioning, but continue to see income as the support, while we await events that are beyond our control," Burns added.
The trust said its net asset value stood at 96.0 pence on December 31, giving a net asset value total return for the six months to that date of negative 17.9%. The benchmark index returned negative 20.7% by comparison.
The trust's ordinary share price total return of negative 9.7% for the six months was better than the net asset value total return, as the discount at which the shares traded to NAV narrowed to 14.6% from 22.1% over the period.
"The share price is 86.0 pence and the discount stands at 14.5% after a strong NAV run at the time of writing," Burns said.
Shares in the trust were up 2.9% at 88.25p on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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