Metage Special Emerg - Interim Results
28 Ottobre 1999 - 6:31PM
UK Regulatory
RNS No 7516j
METAGE SPECIAL EMERGING MARKETS FUND
27 October 1999
Preliminary Announcement of unaudited results for the six months ended
June 30, 1999 and 1998 and for the year ended December 31, 1998
Capital June 30 June 30 December 31
1999 1999 1998
US$000's US$000's US$000's
Investments at market value
Long Positions 38,744 28,611 29,194
Short Positions (4,592) (169) (712)
Unrealised loss on forward contracts (17) - -
Net Current(Liabilities)/Assets (4,235) (4,665) (9,369)
------ ------ ------
29,900 23,777 19,113
------ ------ ------
Number of shares outstanding 1,616,650 1,616,650 1,616,650
Net Asset Value per Share (US$) 18.50 14.71 11.82
Profit and Loss June 30 June 30 December 31
1999 1999 1998
US$000's US$000's US$000's
Dividends (Net of witholding tax) 633 384 900
Interest Income 61 74 93
Other Income - 5 14
Investment, management and
administrative expenses (666) (430) (724)
Interest expense (316) (240) (451)
Loss on ordinary activities
attributable to shareholders (288) (207) (168)
Loss per share (US$)* (0.178) (0.128) (0.104)
* The loss per share has been based on the average number of shares in issue
throughout the six months ended June 30, 1999 of 1,616,650 (six months ended
June 30, 1998 and year ended December 31, 1998 - 1,616,650)
The Net Asset Value of the Fund increased by 56.5% since December 31, 1998,
whilst the Fund's benchmark, the price return of the MSCI Emerging Markets Free
Index, rose by 38.4%. The Fund's cumulative excess return since re-launch
(expressed as the ratio of the Fund's return to the benchmark return) increased
from 26.4% to 42.9% over the period.
Quarter 1
The new year started on a buoyant note, with investors who missed the late
rally in 1998 squeezing global emerging markets up 6% in the first week.
Sentiment quickly turned however, as the long-feared devaluation of the
Brazilian Real became a reality in the middle of January, and the resulting
free-float saw the currency fall from 1.20 to the dollar to 2.00 by the end of
the month. The Latin American equity markets fell in sympathy, but the
contagion was short-lived. The Real quickly bottomed-out, and since that
initial volatility, a broad-based rcturn of confidence steadily gained
momentum with the benchmark MSCI Emerging Market Free Index ending the quarter
up 12.0%. This corresponds to a return of over 40% since the lows of 1998.
The best performing market of the quarter was Russia, where stocks bounced 63%
in dollar terms from their depressed year-end levels.
Corporate activity continued to be prominent amongst our portfolio holdings and
contributed to the Fund's performance. Invesco Korea started the year on a 19.5%
discount, and subsequently announced restructuring plans enabling us to exit
for cash close to asset value. Sri Lanka Growth, acquired on a 35% discount in
November 1998, open-ended in January. Emerging Mexico Fund finally succumbed
to shareholder pressure and a liquidation proposal was approved. Funds buying
back shares included Baring Puma, Fleming Russia and Morgan Grenfell Latin
America.
Discount contraction within our portfolio of closed end funds provided us with
some of our out-performance and we continued to seek value away from closed
end funds, and were active in GDRs, Taiwanese convertible bonds and index
futures.
Quarter 2
Emerging equity markets experienced their best quarter since the 1993 bull
market, with a rise of 23.6%. The Fund also had a very good quarter, with the
net asset value rising by 34.6%, generating a substantial outperformance of
the benchmark. Returns in emerging equity markets were driven by declining
interest rates, following a period of relative currency stability since the
Brazilian devaluation at the beginning of the year. The strength of the Asian
markets reflected investors' satisfaction with the ongoing restructuring of
the banking and corporate sectors, which took place most notably in Korea,
Thailand and Malaysia.
It was particularly pleasing that almost all areas of our trading activity
contributed something to the Fund's outperformance of its benchmark during
this quarter. We came into the quarter overweight, and steadily raised the
Fund's overall beta up until mid-June. Our overweight exposure was focused on
Asia, especially Korea and Thailand, which proved to be a very successful
asset allocation decision. Amongst country funds, volatile discounts on
locally listed Greek funds enabled us to generate substantial excess returns
in this market. Restructuring plays have included the successful conclusion
of the Invesco Korea trade, and a large cash distribution from our holding in
the Vietnam Fund.
We were particularly active in warrants and convertibles this quarter. We
exploited some interesting cheap volatility plays amongst equity warrants,
including warrants exercisable into country funds and into Korean local shares.
We were involved in several private placements of Korean convertible bonds
with very attractive conversion features. Finally, we once again saw highly
profitable trading opportunities amongst Taiwanese convertible bonds trading
at significant discounts to their conversion values.
We are very happy with the performance of the Fund over the first half of 1999,
and are pleased to be able to report that there currently appear to be many
attractive investment opportunities, both in closed-end funds and in the other
areas in which we specialise.
The directors have not declared a dividend for the period ended June 30, 1999
(1998: nil).
The report and financial statements for the period ended June 30, 1999 will
be sent to shareholders by the end of November 1999 and will be available to
members from the offices of the Administrator at The Bank of Bermuda Ltd.,
6 Front St., Hamilton.
END
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