7th Sep 2018 12:11
LONDON (Alliance News) - Weiss Korea Opportunity Fund Ltd said Friday its net asset value per share underperformed against its benchmark in the fist six months of 2018.
Weiss Korea's first half net asset value per share as at June 30 decreased to 166.17 pence from 191.15p at the end of 2017. The fund's total net assets decreased to GBP140.2 million from GBP161.3 million.
The 10.2% decrease underperformed against the MSCI Korea 25/50 Net Total Return Index, which decreased by 7.0% in sterling terms.
The fund said that during the half the market-weighted discount of the preference shares in the portfolio increased to 43.6% from 37.5% a year ago. The increase in discounts "hindered" recent returns, but will provide "greater upside" in the long-run.
Weiss Korea said the half was "disappointing", for both the company and the South Korean market as a whole.
The fund blamed the poor performance on the trade tensions between the US and China. If the US imposes further tariffs on Chinese imports, it could have a "strong adverse effect" on South Korean companies who supply inputs to products that are assembled in China and exported to the US.
Weiss Korea believes the "risk of protectionism" is a "serious threat" to the South Korean economy. The rise in oil prices were also partly to blame for South Korea's sluggish performance.
The company said: "Our outlook is cautious; the vagaries of U.S. foreign policy - assuming that the U.S. actually has a foreign policy - certainly affect the future of South Korea. We don't know whether to expect 'fire and fury' next month, or a continuation of a 'very good personal relationship' between Kim Jong Un and President Trump. Predicting the behaviour of a President who prides himself on being unpredictable is a mug's game."
"While we don't purport to be able to predict short-term or even medium-term movements in equity indices, the high earnings yield of the South Korean market, combined with the discounts on the preference shares, would seem to more than compensate investors for geopolitical risks associated with investing in South Korea," Weiss Korea added.
Shares in Weiss Korea went untraded Friday, last quoted at 162.50 pence each.
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Weiss Korea Opp