By the end of yesterdays trading session at the local equity bourse, investors weren just disappointed by dull market behaviour that saw volumes mark its lowest tick since December 2008.
Many also felt let down by the lower-than-expected dividend payout by NIT, the countrys biggest and state-owned investment management company. Against the dividend yield of 11~12 percent seen in the yesteryears, NIT gave a cash return of 8 percent, based on June 30 unit prices.
For a market, already in the doldrums this may be a sentiment dampener. But think again. The banks - NBP, BOP, & FABL - that had held significant quantities of NIT units once, do not hold the same kind of huge quantities today. This means that lower-than-expected dividend shouldn be a put off for the equity market as such.
Plus, dividend yield isn the only criterion; total return is. And thats where NIT has traditionally fared much better than its peers.
The state-owned firm yielded 18 percent return during the year, despite the fact that the said banks continued selling their units in the market, which kept NITs net-asset-value (NAV) depressed over the year.
"Had it not been the case, NITs total return could have been about 30 percent," sources in the fund management told BR Research.
Moreover, the management has used the funds deep pockets by paying more than what it earned during the year. NITs main fund earned Rs2.16 per unit during the years, but paid Rs2.25 per unit as cash dividend - using Re0.9 from its reserves.
The firm still has about Rs7 per share in its reserves, which it may utilize over the course of next few quarters, if and when need be.
Even though, many fingers have been raised since the alleged political appointments in NIT - including its new MD and some others on the investment management committee - sources say the fund will continue to meet investors expectations, and dole out the market if the situation ever arises.
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