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Sagicor Select Finance Fund posts mid-year loss

The Financial Select Fund of Sagicor Select Funds Limited recorded a net loss of J$323.7 million for the quarter ending June 2020.

Sagicor Select Funds saw loss of more than J$300 million for the most recent quarter.

This outturn was due to unrealised depreciation in value of investments of J$334.9 million.

Year-to-date losses are J$1.7 billion, compared to J$411.6 million in profit made at June 2019.

The Financial Select fund holds securities listed on the Jamaica Stock Exchange and the value of these stocks reflected the overall market conditions that prevailed during the quarter, management outlined in the period’s report.

For the June quarter dividend income was J$16.6 million, this was lower than previous quarters due to the impact of COVID-19, the fund’s management indicates in its report.

It was noted, “The central bank’s decision to suspend dividend payments by deposit-taking institutions as well as companies reserving payments to buffer their cash holdings due to possible fall-out were among factors that led to reduced dividend earnings.”

The equities market displayed some rebound relative to the end of March 2020. But this came against the background of the decline in the market in March 2020, following the first confirmed case of COVID-19 in Jamaica.

Relative to a year prior, all JSE indices declined in value, with the JSE Main and Junior Market indices recording reductions of 18.0 per cent and 16.5 per cent, respectively.

Sagicor Select Finance Limited indicates that in addition to reduced dividend pay-out, the losses in the value of assets held by financial companies have negatively impacted financial performance and lowered investor confidence.

Stocks more aligned with consumer staples, health care and delivery traded higher in the quarter.

Management of the Fund project that the gradual reopening of economies worldwide has brought some optimism, but there remain substantial risks to economic activities associated with the COVID-19 pandemic.

“A return to normalcy is primarily predicated on the discovery of a COVID-19 vaccine. While there are early positive indications, there is still some way to go before the vaccine is ready and safe for the public,” it was suggested.

Management asserted that Jamaica’s reopening of the local economy with sectors such as tourism and entertainment offers some positive indications.

“Projections indicate that the economy should record growth in 2021; however, a return to pre-COVID output level is still further out. As such, the earnings for most companies could continue to be depressed beyond the near-term,” it was stated.

Total expenses for June quarter amounted to J$5.7 million. The cost was largely comprised of management fees and trustee fees of J$3.0 million and J$1.6 million, respectively.