Whilst global appetite for equities remains firmly focussed on trade wars, the UK market is driven by a more domestic issue. We have said for some time now that a wide range of companies that we invest in need a resolution to Brexit, one way or another, to be able to move forward and to start planning future capital spending programmes and to properly implement growth strategies. Some sort of certainty is desperately needed. Hopefully the general election next month will provide the catalyst for this, although this is by no means guaranteed to be the case, as the odds on another hung parliament currently suggest. We expect further downward pressure on macro estimates as the business of government grinds to a halt for six weeks and sentiment will not be relieved by corporate statements which we expect to be universally cautious with respect to domestic earnings. In the next month, we expect to be overwhelmed by commentators analysing what stocks will perform best or worst under differing election outcomes. We continue to take comfort in the fact that investors are generally underweight in UK equities and that overseas companies and private equity continue to see good value within our investable universe.
A combination of positive and reassuring trading statements underpinned strong performance in the month from Rank, Hays, GVC and XP Power. Wincanton performed well after it announced that it was considering making an offer for Eddie Stobart Logistics, and Pennon continued to rise after the Board announced a strategic review of the business. On the downside, poor or indifferent updates undermined the valuations of De La Rue, Synthomer and Devro. As a generalisation, investors are now anticipating earnings downgrades across a broad range of industrial cyclicals as the effects of the trade wars and global slowdown begin to bite. This does throw up short term opportunities for us and we added a new stock to the fund: Vesuvius, a business serving the steel and foundry industries worldwide, after a downgrade and on a dividend yield in excess of five percent. The consensus view at the moment seems to suggest that in the short term there is more downward pressure on earnings to come but that on a look through basis earnings could be set to be revised upwards in the first half of next year. This is currently a view that we subscribe to and should help to put a floor under valuations.