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Macau casino fund soars, Patient Capital plunges as inflation fears hit markets

Macau casino fund soars, Patient Capital plunges as inflation fears hit markets

A well-timed disposal has seen Macau Property Opportunities (MPO) buck a global sell-off that has pushed Woodford Patient Capital Trust (WPCT) to an all-time low and sent shares in highly geared investment trusts lower.

In contrast to Asia markets which tumbled 2% overnight, shares in London-listed MPO leaped 5.5% to 190p after selling one of its biggest developments for a 14% premium.

The £137 million Guernsey-based investment company trades at a 25% discount to net asset value and is the only quoted property fund dedicated to investing in Macau, an autonomous city on the south China coast where gaming is legalised.

Managed by Sniper Capital, it is in the process of winding up and returning cash to shareholders and today announced the HK$800 million (US102.3 million or £72.5 million) sale of Senado Square, a retail redevelopment site in Macau’s Unesco-listed shopping precinct that accounted for a fifth of its portfolio last year.

The buyers – Ardent Success Limited and City Universe Limited – are paying 14% more than Senado’s valuation of HK$703 million (US$90 million) at the end of December. MPO said this represented a 541% gain over the US$15.96 million it paid for Senado in 2007.

MPO shares have rallied over 24% in the past year but until today had been quiet this year. Today’s spike came as other investment trust share prices came under renewed pressure with the FTSE 100 continuing last week’s slide, down 1.4%, having slid 4.5% so far this year.

Asia and technology focused trusts were the biggest fallers.

Scottish Mortgage (SMT), the only trust in the index of UK’s top 100 stocks, fell 2.6% or 11.8p to 444.2p but shook off last week's discount to trade at a premium of just over 1% to NAV, according to Morningstar data.

Allianz Technology Trust (ATT) tumbled 3.6% or 42.5p with Herald Investment Trust sliding 3.9% to £11.10 and Polar Capital Technology (PCT) down 2.8% or 32p to £10.94.

With a portfolio laden with early-stage medical discovery companies, Woodford Patient Capital Trust was among the big fallers. Its shares declined 4.3% or 3.5p to a new low of 77.7p and a discount to NAV of 8.4%, according to Morningstar.

Under star equity income manager Neil Woodford, the trust raised a record £800 million at 100p in 2015, but after a bright start has suffered from a bear market in biotechnology and question marks over Woodford’s stock selection. Woodford has defied the sceptics, telling investors recently that the portfolio was ‘on the cusp’ of a recovery this year, a view that was endorsed by James Henderson of Henderson Opportunities Trust (HOT), which tumbled 50p or 4.6% to £10.40.

Also under pressure were VinaCapital Vietnam Opportunity (VOF), sliding 11p or 3% to 349p; and JPMorgan Smaller Companies, (JMI) marked down 6.3% or 72.5p at £10.80.

MPO was not alone in making gains, however. Other closed-end funds flashing green on investors’ screens were property investor Raven Russia (RUS), up 1.5p or 3% to 49.5p.

Debt fund Sequoia Economic Infrastructure (SEQI) added 0.5% or 0.5p to 108p, HarbourVest Global Private Equity (HVPE) notched up 12p or 1% to £12.28 and Riverstone Energy (RSE) firmed 8p or 0.6% to £12.76 after releasing a fourth quarter summary of its portfolio ahead of full-year results on 28 February.


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