Emerging markets fund manger APQ Global (LON:APQ) expects lots of opportunities this year in the wake of the election Donald Trump as US President and a more hawkish US Federal Reserve.
“Trump’s expansive tax policy and ambitious infrastructure plans will almost certainly increase the United States’ fiscal deficit and public debt, the effects of which will be felt globally, said Wayne Bulpitt, APQ’s chairman.
“His proposed fiscal expansion is happening at a time of full employment, which should fuel growth and higher inflation domestically.”
“As a result, I also expect the Federal Reserve to become more proactive with rate hikes in 2017 and the sell-off in the American bond market to intensify. This leads me to remain cautious on the outlook for global equity markets.”
Bulpitt believes this will be good news for the fund manager.
“A stronger US Dollar should give us the chance to pick up emerging market exposure at better valuations.
“A higher oil price will support our exposure in the energy sectors. “Higher nominal growth in the global economy will support export sectors in emerging markets.
“In short, opportunities abound and we are well positioned to take advantage of them.”
APQ joined AIM last August when it raised £78mln. At the end of 2016 all funds were fully deployed with 10% of the book value reserved in cash.
Bulpitt said risk exposure of the company was kept low going into the US Presidential elections, which had served the company well.
Emerging markets had a challenging time with the global emerging markets equity ETF down 5.73% and the emerging markets corporate bond down 3.14% from the time of the IPO in August 2016 until year end.
Emerging market currencies in general during this period were caught up in the updraft of the US Dollar and posted significant losses as a result.
Going forward, APQ said it was on track to hit its 6% yield target after a solid performance in its first year since listing. The company has paid two quarterly dividend since it floated.
At the end of 2016 book value per share was 99.15p with net assets worth £77.4mln.
Shares today were trading at 108p.