Salvus Strategic Investments warns of a gloomy outlook for companies in its latest quarterly update, despite expected Reserve Bank rate cuts.
Severe financial stress during the last quarter had resulted in the collapse of an unprecedented number of financial institutions, and the involvement of governments in the banking system.
Salvus expected the global economy to get worse before it gets better. However, despite the uncertain outlook for New Zealand companies in general, exporters would benefit from a weaker New Zealand dollar, undercut by falling interest rates and a weak economy.
Salvus' portfolio included stakes in New Zealand Oil & Gas, Methven, Abano Healthcare, Energy World Corp (EWC) and Wellington Drive Technologies. Sixteen percent of the portfolio was in cash.
Salvus expected long-term performance from its holdings, which had robust balance sheets and strong cash flows, but said the net asset value per share fell 14.2% during the quarter, larger than the decline of 5.2% for the NZX small cap index.
In particular, shares in the energy companies NZOG and EWC had been hit by concerns about global growth and weak commodity prices, the company said.
