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The investment company, WAM Global Limited (ASX:WGB) reported an overall decline of 9.0% in its investment portfolio, resulting in an operational loss after tax of $31.6 million for the period from the date of its incorporation, i.e., 21 February 2018, to 31 December 2018.
The downtrend in WAMâs interim results underscores the heightened volatility in the global equity market during the period. The increased volatility underpinned by oscillation of investorsâ sentiment on global macroeconomics and political news has weighed heavily on major equity markets with small and mid-cap companies suffering the most. The benchmark indices like the S&P Global Mid Small Cap Index was down 12.3%, and MSCI World Index slipped 5.7% in the period.
WAM Globalâs before tax NTA decreased 9.8% to $1.98 per share as at 31 December 2018. As per the companyâs information, the significant items of difference between the investment portfolio decrease of 9.0% and the net tangible asset performance were management fees of 0.6% and other company related expenses of 0.2%.
Recently listed on the Australian Securities Exchange, the Group had raised $465.5 million through an Initial Public Offering (IPO) in June 2018. It included the issue of 211,607,622 shares at an issue price of $2.20 per share.
The company is primarily into the business of making investments in listed global securities with a majority of its investment held in US-based companies including American Express, CDW Corporation and Markel to name few. On the basis of geographical exposure, WAM Globalâs portfolio includes 43.9% investment in the United States of America, 5.7% in the United Kingdom, 5.6% in France, 4.9% in Germany, 6.2% in others and remaining 29.9% in the form of cash.
The impact of global economies and the key regulatory decision can be seen drastically impacting the portfolio of the Group. During the reporting period, WAM Global has witnessed a critical change in global macroeconomics including the European Central Bank bringing its quantitative easing program to an end and keeping rates on hold in December as the Brexit uncertainties stood still. The global trades getting impacted by US-China trade war, the decline in German economic growth which has fallen to its lowest rate in five years, the significant meltdown in the Chinese economy and social strife in France in response to President Macronâs reform agenda.
Due to the extreme levels of these political and economic uncertainties, the Group had held high cash levels, 29.9% of its total investment portfolio as at 31 December 2018. But on the bright side, a favourable start to the year can be seen with US Federal Reserve surprisingly keeping the interest rates unchanged and indicating that quantitative tightening might be over. Also, President Xi Jinping has increased Chinaâs stimulus significantly which is to accelerate global economic growth, thereby strengthening the potential for positive momentum in the equity market.
Consolidating all the recent favourable change in macroeconomics, WAM Globalâs has changed its cash level to 18.5% of its total investment portfolio, down from previous 29.9% as at the end of 2018. Going forward, the Board stated that it intends to pay fully franked dividends to shareholders provided sufficient profit reserves and franking credits backs it.
WAM Globalâs shares traded flat on 1 March 2019 with the daily volume change of 291,901 shares. Since its listing on ASX, WGB has fallen by 13.18% including the negative performance change of 6.37% in the past three months to date.
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