Gavin Lumsden, Citywire Investment Trust Insider, 24 Feb, 2022:
JPMorgan Russian Securities (JRS) is, perhaps not surprisingly, today’s biggest investment trust faller, sliding 20% to 459p, just above its March 2020 pandemic low.
Shares in the £232m closed-end fund managed by Oleg Biryulyov and Habib Saikaly, the only London-listed Russian specialist, had before today fallen 19.5% this year as investors responded to the growing threat of Western sanctions against Russia.
Today’s slump – which saw it at one point drop a third to a low of 382p – matches that decline and will elevate the trust’s already high 10.5% dividend yield. It came as the US and Nato allies vowed to step up their financial reprisals against President Putin and his regime.
With trading on Moscow’s stock exchange briefly suspended, the London-listed shares of Gazprom, the Russian energy giant that accounted for 20.5% of the portfolio at the end of January, plunged 29%.
Sberbank, the trust’s joint second-largest holding at 13.1%, sank 53%. Earlier this week the US administration said it was considering sanctions against the bank and all major Russian financial institutions, including VTB bank, its seventh-biggest holding at 2.8% of assets as of 31 January.
The fund managers and the trust’s board have not spoken on the crisis so far, but have removed gearing, or borrowing, to avoid magnifying stock market falls and exacerbating investor losses.
At 459p the shares trail on a wide 25% discount to their net asset value of 608p yesterday released this morning, although, with so much volatility in the underlying holdings, there is inevitably uncertainty over the valuation…
James Carthew, our columnist and analyst at Marten & Co, believes that on moral grounds the trust is beyond the pale as a bargain opportunity. ‘Unburdened by conscience, the temptation would be to say that JRS is cheap.
‘However, with Russian forces unleashing a major military assault on Ukraine, it is now reasonable to ask whether, rather than pussyfooting around sanctioning the odd individual, it is time to say that no western money should be invested in Russia until Putin goes,’ Carthew said.
Read more here