15th Oct 2019 13:55
(Alliance News) - CQS Natural Resources Growth & Income PLC said Tuesday its recently ended financial year was challenging, due to a "savage sell off" in global equities particularly in the second quarter.
For the year to the end of June, the resources-focused investor reported a net asset value negative return of 13.9%.
This reflects an underperformance compared to CQS's benchmark, which comprises two-thirds of the Euromoney Global Mining Index and one-third of the Credit Suisse High Yield Index.
The composite index made a positive return of 12.8% for the year.
Net asset value per share as at June 30 was 116.2 pence, down 18% from 142.4p the same date the year before.
CQS reported that its share price at the end of June was 89.3 pence, reflecting a discount to net asset value of 23%.
Shares in CQS Natural Resources were marginally higher on the day Tuesday at 87.25 pence, but declined since the year-end.
The trust said that its poor performance throughout the year was mainly concentrated in the second quarter, as smaller cap equities struggled under US-China trade war concerns, geopolitical tensions and continued Brexit uncertainties.
Another headwind CQS identified was its lack of exposure to iron ore, which rallied in the second half of its financial year following a cut in miner Vale SA's supply due to the Brumadinho tailings dam failure in Brazil.
CQS declared a dividend of 5.60 pence per share, remaining flat compared to the year before.
"The dominant theme remains the US-China trade war. The Trump administration has chosen to weaponise trade tariffs and even now these are hanging over the EU. In addition civil unrest in Hong Kong is exacerbating this and locally Brexit uncertainty is causing unease. The major effect of this to the company would be currency volatility affecting the net asset value.," said Chair Richard Pickett.
"The company, has however, positioned itself for the medium to longer term and is looking beyond the 2020 US election cycle," Pickett added.
By Dayo Laniyan; [email protected]
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