CT UK High Income Trust PLC on Friday said that the wars in Ukraine and the Middle East had little impact as it expects interest rates to settle in the 3% to 4% range.
The UK equities-focused investor said net asset value per share rose 14% to 97.90 pence at September 30 from 85.98p a year prior.
NAV total return was 6.8% for the six months to September 30, outperforming the benchmark, the FTSE All-Share index, which had a return of 6.1%.
‘Equity markets globally have been positive in 2024 and the UK has joined in, albeit at a slower pace than other major markets,’ CT UK High said, adding: ‘As is now the norm, market sectors have been volatile within this as they reacted to newsflow whether geo-political, macro-economic and on occasion even stock specific. Perhaps surprisingly, the continuing war in Ukraine, the conflict in the Middle East and the potential for this to expand into a wider regional war have had, in the main, limited impact on equity markets. The bigger focus once again has been on inflation and interest rates.’
Looking ahead, Chair Andrew Watkins, citing the firm’s portfolio manager David Moss, said that despite the new UK government being ‘increasingly negative on the inherited fiscal situation...we will have a period of stable government - rather unusual in the context of our European trading partners - which, of itself, should encourage vital foreign direct investment to help our economy to grow. The anticipated cuts in interest rates will help reduce the cost of borrowing for all but particularly the cost of borrowing on mortgages.’
Chair Watkins added: ‘Our portfolio manager continues to believe that while the cost of borrowing will continue to fall, we are in a regime more in common with the 1990s than the period post-financial crisis and interest rates, wherever they settle, will remain positive in real terms, likely in the 3-4% range.’
CT UK High said the total dividend for the current financial year ending on March 31 will be at least 5.62 pence per share, in line with financial 2024. It applies to both the ordinary and B share.
CT UK High shares were flat at 88.50 pence each on Friday morning in London.
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