Investment companies lost a combined EUR 328.28 mln in 2008 in one of the worst performances ever tracked by the Financial Mirror, with the massive 77% drop in equity prices and declines in real estate taking their toll on fund performances.
The combined total assets of the 17 investment companies listed on the Cyprus Stock Exchange fell to EUR 423.85 mln at the end of 2008, compared to EUR 752.13 mln at the end of 2007, according to an exclusive Financial Mirror survey based on company filings.
The 44% decline in total assets may seem better than the 77% fall in equity prices in Cyprus last year, but this does not soften the blow considering that many companies have for long diversified heavily into real estate and non-listed investments.
Investors in Cyprus usually avoid investment company stocks since the track record of the fund managers is not good, with many portfolios showing no change in holdings throughout the year.
That also explains why the discount between the Net Asset Value (NAV) of the investment companies compared to their traded prices on the CSE, especially in the case of the large cap companies, is very wide.
Demetra Investment Plc (DEM) remained the largest investment company with total assets of EUR 190.4 mln at the end of 2008, down by EUR 79 mln from EUR 269.3 mln at the end of 2007. Based on the stock’s latest closing price, DEM is trading at a 71.3% discount to its NAV. The company’s portfolio has 10.3% invested in the local banking sector (vs. 15.1% as at September 30, 2008), 33.0% in real estate (vs. 28.9%), 6.1% in other local equities (vs. 5.5%), 3.6% in Government Bonds (vs. 3.2%) and 32.0 % in cash (vs. 28.1%).
Interfund slips
Interfund (INF) was the big loser among the major cap companies as it slipped from third position to fifth based on total assets.
INF’s total assets fell by a whopping EUR 68.2 mln in 2008 and from EUR 95.9 mln at the end of 2007. By the end of last year, the company’s total assets had declined to EUR 27.7 mln. INF is currently trading at a 51% discount compared to its latest NAV.
Unigrowth gains
Unigrowth (UNI) moved up a place in the overall rankings to 11th position as its losses were negligible, while Empire Capital (EMP) and Regallia (REG) also gained one place each, by moving to 13th and 15th positions, respectively.
Athena Cyprus Pcl (ATH) was the second largest investment company in Cyprus with total assets of EUR 48 mln. Based on the stock’s latest closing price, ATH is trading at a 61% discount to its NAV. The company’s portfolio consists of 9.1% investments in the local banking sector (vs. 11.8% as at September 30, 2008), 13.8% in international investments (vs. 13.4%), 8.1% in other local equities (vs. 10.5%), 2.6% in Government Bonds (vs. 2.2%) and 53.3% in cash (vs. 46.0%).
