9th Jun 2016 17:20
LONDON (Alliance News) - JPMorgan Russian Securities PLC on Thursday said its "pleasing" first-half performance was thanks to "significant improvements" in some areas of the Russian market, and is hoping for the recent increase in oil prices to continue.
The trust's net asset value on a total return basis was a positive 17.3% in the six months ended April 30, and its return to shareholders on a total return basis was positive 16.9% over the period. The discount at which the shares traded to net asset value experienced "little change" and ended the period at 14.8%.
Performance in terms of return to shareholders on a total return basis was 1% below the benchmark, which ended the reporting period up 17.9%, the trust said.
In comparison to the previous year, the markets in the current period were relatively calm, which is almost certainly attributable to the increasing oil price. The higher oil price also led to a significant upward movement in the Russian stock market and strengthening of the ruble, demonstrating how closely the Russian stock market is linked to the oil price," Chairman Gill Nott said in a statement.
"There have also been no significant changes in the US/EU relations with Russia although economic sanctions continue. However, the breaking of economic ties with Turkey in late 2015 could have a material negative impact on the Russian economy over a prolonged period," Nott said.
The chairman said that in the event oil prices continue to rise, "it seems likely that it will have a positive economic impact on the Russian economy and the stock market in the second half of the company's financial year."
Investment manager Oleg Biryulyov has "maintained his consistent approach of investing in well managed companies with strong balance sheets. He continues to believe that the equity market in Russia provides a good long term investment opportunity if the right stocks are selected," Nott said.
"However, economic sanctions against Russia remain and the political outlook is uncertain in both the middle-East, USA and Europe. These significant geopolitical and economic issues will continue to impact the Russian market, together with concerns regarding the state of the domestic economy. Thus, the outlook remains uncertain but with some potential for upside if the oil price continues to strengthen," Nott said.
Biryulyov said: "We do not expect any lifting of sanctions in 2016, but think the election cycle in the US and the European Union has the potential to begin driving change in 2017."
Shares in JPMorgan Russian Securities closed down 0.4% at 350.00 pence Thursday.
By Samuel Agini; [email protected]; @samuelagini
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