Cash balances unchanged at CYP 53.8 mln

The combined assets of the 25 investment companies listed on the CSE fell 6.9% during the second quarter to CYP 214.33 mln from CYP 230 mln at the end of March, but cash balances were steady to mildly down at CYP 53.8 mln, according to a survey carried out by the Financial Mirror.

The 22 Approved Investment companies and 3 companies listed in the Others sector however, managed to record a better performance than the CSE All-Share index, since their combined net asset values (NAV) fell by 8.66% in the second quarter compared to the 12.8% decline of the CSE All-Share index.

After gaining 6.3% in the first quarter to 85.60 points, the CSE All-Share index fell 12.8% in the second quarter to 74.66 points, and when compared to its start point at the beginning of this year at 80.58 points, it has declined by 7.3% during the first half.

Among the major funds, with assets in excess of CYP 5 mln, Apollo Investments Fund reported the best performance since its NAV took a 3.5% hit, while Aiantas was the worst performer, as its NAV fell 10.2% in the second quarter.

Leda Investments, listed in the Others sector was the best performer, with its NAV declining by 0.7% only, while Regallia Investments, also in the Others sector was the worst performer with its NAV declining by 24.75%.

CASH REMAINS KING

The total cash holdings of all companies covered in the survey was marginally lower at CYP 53.8 mln, compared to CYP 55.9 mln at the end of March.

Demetra Investments, the largest fund, was the biggest contributor by maintaining CYP 32.2 mln of its holdings in cash. The large cash holdings indicate the reluctance of fund managers to commit funds to the market as they await even lower prices or a reversal in the negative sentiment that continues to hammer stocks.

About 44% of total investments, or CYP 95.2 mln were allocated to investments in CSE titles while another CYP 21.8 mln, or 10.2% were held in unlisted titles, some of which were parked in group related companies.

In terms of rankings, Demetra Investments (DEM) remained the biggest fund, with total assets of CYP 89.22 mln, of which CYP 32.8 mln were invested in CSE titles, CYP 6.3 mln in unlisted holdings while CYP 32.2 mln were held in cash.

Athena Cyprus Investments was the second largest fund, with CYP 24.99 mln assets, of which CYP 9.9 mln were in CSE titles, CYP 1.8 mln in unlisted titles, CYP 868.000 were held abroad, while CYP 7.8 mln was in cash.

Interfund Investments (INF) was the third largest fund, with CYP 16.8 mln in assets, of which CYP 10.5 mln were in Cyprus while the fund was holding CYP 4.9 mln in cash.

Cytrustees (CYT) was the only fund to move higher in the overall rankings, moving into fourth place with total assets amounting to CYP 15.5 mln, of which CYP 8.9 mln were in Cyprus, CYP 1.5 mln abroad while CYP 2.6 mln were held in cash.

Aiantas moved into fifth place with total assets at CYP 14.3 mln, of which CYP 3.7 mln in CSE listed companies, CYP 7.4 mln in unlisted titles and CYP 1.4 mln in cash.

UNJUSTIFIED PREMIUM

The survey conducted by Financial Mirror found that eight titles were trading at a premium compared to their net asset value (NAV), which in a bear-market does not seem justified.

Exelixis (EXEL) with a 208% premium was by far the most expensive, followed by Regallia and Worldmax with a 189% and 185% respective premiums.

HUGE DISCOUNT

In a sign that the price distortion is only limited to the small funds, the largest funds were all trading at a huge discount compared to their NAV.

The largest fund, Demetra, last quoted at 21.6c is trading at a 50% discount compared to its NAV of 44.5c. The second largest fund, Athena was trading at a discount of 42%. Interfund, last quoted at 7.2c is trading at a 21% discount compared to its NAV of 10.7c, while Cytrustees is trading at an average discount of 24%. Apollo Investments, last quoted at 14.8c, is trading at a 36% discount compared to its NAV of 23c while Aiantas is lingering at a discount of 53%.

FOREIGN PREFERENCE

The CSE's four-year uninterrupted decline has forced many fund managers to allocate a higher allocation to stocks and funds abroad, than Cyprus.

In a number of cases, some funds had invested more funds abroad in search of better returns, than in Cyprus, as they attempted to capitalise on the rapid advance in capital markets abroad.

Actibond Growth Fund (ACT) was by far the most aggressive, having placed CYP 2.7 mln funds abroad, or about 60% of its total assets and well in excess of CYP 1.74 mln allocated to Cyprus.

Apollo Investments (APOL) was equally aggressive. With CYP 5.7 mln in foreign investments, or 52% of its total assets, Apollo was by far the biggest investor abroad, and similar to Actibond, its foreign investments exceeded its local investments, amounting to only CYP 4.1 mln.

The total amount of investments abroad amounted to CYP 13.8 mln, or 6.5% of total assets and is considered very small compared to the overall CYP 214 mln total, mostly because of the lack of significant foreign investments by Demetra, Athena and Interfund.

The details of Knossos and Harvest were up until December 31, 2003, since they had not posted their first quarter portfolio mix by July 20, 2004 when the Financial Mirror survey was conducted

22/07/04