(Alliance News) - EP Global Opportunities Trust PLC on Thursday said net asset value declined in the first half of 2020 as the Covid-19 pandemic hurt equity markets.
The Edinburgh-headquartered company invests globally, predominantly in quoted equities, and reported an NAV per share of 294.4 pence per share as at June 30, down 8.2% from 320.8p at the end of 2019.
"The Covid-19 coronavirus pandemic had a dramatic impact on global equity markets. A precipitous decline in share prices in March 2020, as the full impact of the inevitable economic disruption was recognised by investors, resulted in large losses in the first three months of the year," Chair Teddy Tulloch explained.
"This was partially reversed in the second quarter, as equity markets responded to the actions of central banks, who reduced interest rates and injected liquidity, and governments, who significantly boosted expenditure, to avoid an economic depression," he added.
As at June 30, the company's shares were trading at a 9.0% discount to NAV, worsening from a 3.4% discount at the end of December.
Looking ahead, EP Global Opportunities said there are "clear signs of an economic recovery" as lockdown measures east, though the strength of that recovery is not known and unemployment is likely to incease with additional corporate bankruptcies "inevitable".
Tulloch said: "The higher level of cash balances has impacted recent short-term performance, particularly when equity markets have risen, as occurred in the second quarter of 2020. The investment manager believes this recent equity market rise has been due to investor sentiment and the actions of central banks rather than being sustainably driven by future profits growth. It continues to maintain its disciplined investment approach, with the current over-riding priority being one of capital preservation.
"We held 13.9% of our assets in cash at the end of June 2020 which will enable our investment manager to take advantage of investment opportunities that it anticipates will be forthcoming in the months ahead."
Shares in EP Global Opportunities were down 1.3% at 262.50p in London on Thursday afternoon.
By Anna Farley; annafarley@alliancenews.com
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