4th Jun 2015 16:21
LONDON (Alliance News) - Montanaro European Smaller Cos Trust PLC Thursday said its net asset value per share for the year ended March 31 missed its benchmark, but said its longer-term performance remains good.
Montanaro said its net asset value per share for the year was down 3.6% at 572.2 pence, missing the MSCI Europe SmallCap (ex UK) Index benchmark which was up 1.6%. Its share price declined 4.6% to 515.0p, representing a discount to the NAV of 10%.
It said that a reduction of nearly 80p in the NAV per share was caused by a 10% weakening of the euro against sterling, although it did say that the euro's depreciation has made many of the companies it invests in significantly more competitive against their international peers.
"The combined effects of lower oil prices, a weaker euro and falling interest rates should be positive for the European economy. There are tentative early signs that Europe has turned the corner and that a recovery is underway. Therefore, conditions are in place for European corporate profitability to surprise on the upside which in turn suggests that a positive year lies ahead for our investors. We expect 2015 to be a constructive year for the shares of European smaller companies, driven by stronger earnings growth than expected. Nevertheless we do note that valuations are no longer categorically cheap," Chairman A R Irvine said in a statement.
"According to the UK's Investment Association, recent outflows from European smaller company funds exceeded those experienced throughout the whole of the global financial crisis of 2007 and 2008, a sign perhaps that investors have thrown in the towel on this asset class. This augurs well. Historically, periods of capitulation have laid the foundations for a rise in share prices. After a pedestrian year, we look forward to a more rewarding period for investors in this coming year," he added.
Shares in Montanaro closed up 0.5% at 544.00 pence on Thursday.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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