Merchants Trust PLC on Friday said the UK economic and market background was favourable with a large number of attractive investment opportunities, as it reported net asset value growth.

The London-based investment trust, which mainly backs large higher-yielding UK companies, said its net asset value per share rose to 594.6 pence at July 31, up 8.1% from 549.8p one year prior.

The total return of its investment portfolio was 13.5% for the first half compared to 12.3% reported by its benchmark, the FTSE All-Share index.

It declared an interim dividend of 7.1p per share, up from 7.0p.

The company said it is pleasing to see a reduction of political uncertainty in UK, and that it is optimistic about its medium-term outlook for income and capital growth.

Merchants Trust said that demand drivers for the UK economy ‘such as possible government policy changes to stimulate more investment in the UK stock market, may also prove influential. Whether any measure in isolation or all these factors taken together will prompt a sea change remains to be seen, but it is at least a positive that policy makers are increasingly making it clear that they understand the importance of a healthy domestic UK stock market.’

It added: ‘Given the favourable UK economic and market background described above, and the large number of attractive investment opportunities we can see, we remain optimistic about the medium-term outlook for income and capital growth in Merchants’ portfolio.’

Merchants Trust shares were 0.7% higher at 586.00 pence each on late Friday morning in London.

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