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APQ Global switches to more defensive posture

During the second quarter, the company’s credit exposure lost 2.02%, while equity investments lost 3.18% and local currency bond exposure lost 4.89%

The shares trade on a projected yield of 6.7%

Emerging markets-focused APQ Global Limited (LON:APQ) is comfortably on track to meet its target annual dividend yield of 6%.

The investment company issued the reassurance after what it described as a “challenging” second quarter for the company. Including movements in cable - the sterling/US dollar exchange rate - and the dividend paid, shareholder returns reduced by 14.10% in the second quarter of 2018, measured in US dollars.

READ: APQ Global upbeat over emerging markets for 2018

During the second quarter, the company significantly reduced its exposure to equities and local markets, shifting to more defensive instruments.

At the end of the quarter, the bulk of the company’s overall exposure was in credit and government bonds (59.9% of book value), followed by local currency bond exposure (11.0% of book value). Emerging markets (EM) equities accounted for 13.7% of book value.

The company believes that the global economic growth outlook will continue to be supportive for emerging markets equities but that near-term the impact of an escalation in trade wars, political uncertainty in Europe and ongoing tensions with Russia will likely dampen market sentiment.

From a sector perspective, the bulk of the company’s EM exposure is in financials, followed by information technology and basic materials.

The board declared a dividend of 1.5p for the second quarter, unchanged from the previous quarter. With the shares unchanged at 90p, and assuming the quarterly dividend is maintained at 1.5p, the shares are projected to yield 6.7% over the full-year.

Quick facts: APQ Global

Price: 17.5 GBX

Market: AIM
Market Cap: £13.7 m

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