17th Feb 2023 09:07
(Alliance News) - City Of London Investment Trust PLC on Friday reported a higher net asset value, as it expects inflation to cool during the first half of calendar year 2023.
City of London IT announced a net asset value of 395.4 pence at the end of December, up from 390.9p as at June 30, 2022.
Across 2022, the investment firm posted a total NAV return of 5.1%, down from 20% a year prior. This compared to a total NAV return of 0.3% for its benchmark index, the FTSE All-Share index, which had a NAV total return of 18% a year ago.
In the final six months of 2022, however, the company's return was 4.5% compared to the benchmark's 5.1%. City of London Investment Trust said this was achieved despite "continuing turbulence in global markets and a brief period of unprecedented political volatility in the UK".
For the six months to June 30 when its financial year ends, City of London IT said it expected inflation to fall, despite a tight labour market, higher wage settlements and strikes in the UK, which it anticipates to keep inflation above the Bank of England's targeted 2% "for some time".
It added: "This will result in continuing elevated interest rates when compared with recent years since 2009, albeit remaining below the higher rates prevailing before the financial crisis in 2008."
The firm sees China's re-opening of the economy as positive for global growth, while noting lower oil and gas prices as helpful.
"The dividend yield premium of UK equities over bank deposits and 10-year gilts has narrowed, but equities offer the prospect of dividend growth and can therefore provide some element of hedge against inflation," Chair Laurie Magnus said.
City Of London IT shares were 0.4% lower at 427.49 pence each in London on Friday morning.
By Tom Budszus, Alliance News reporter
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