As we end the first half of 2018, equity markets saw a rise in volatility as the threat of an escalating trade war loomed large in the minds of asset allocators. Additionally, whilst European political concerns have eased off, there continues to be discord within the Conservative party regarding the manner of our exit from the European Union. Whilst sentiment did appear to bounce back from a weak (and weather impacted) Q1, the longer-term outlook remains uncertain.
At the portfolio level, we started several new positions in June. We participated in the IPO of Aquis Exchange, a multi-lateral trading facility, which offers a disruptive subscription pricing model allowing significant savings for market participants. We also added a position in RWS, a world leading translation company focused on intellectual property, life sciences and, through a new acquisition, technology localisation. We have held RWS before, and added a position after weakness in the share price, primarily due to FX headwinds. Finally, we participated in a placing to fund a transformational acquisition for Diversified Gas and Oil, a low-cost oil producer in the Appalachian basin in the USA. Elsewhere in the portfolio, we added to Equiniti and Porvair, on share price weakness, and to RPS, the global consultant engineer, to increase our holding to a more meaningful size. We reduced our JTC and Games Workshop positions after excellent recent performance and exited Craneware on valuation grounds.
From a contribution perspective, the Aquis new issue got off to a very strong start, whilst we also saw strong performances from Strix (which benefitted from a re-rating) and Chemring (on positive interim results). On the downside, Ergomed warned the market that contract delays and reductions would cause revenue and profit to fall below analyst expectations. Additionally, Equiniti was weak on concerns from some investors about certain aspects of their accounting. Finally, we saw pressure on our industrial holdings, which have an overseas earnings bias, due to the macro concerns about tariffs and a trade war.