'We continue to regard international equity markets with caution in view of the fragility of the apparent economic recovery in the US and the UK and the recessionary climate in Europe and Japan,' they said in a joint statement yesterday.
'Our exposure to these markets has been largely confined to special situation investments. For instance . . . we have identified a number of interesting opportunities to invest in the debt of US companies which are undergoing corporate reconstructions.'
At RIT Capital Partners, the investment trust that until yesterday was a 37.6 per cent associate company of St James's, only 58 per cent of the fund is in equities. Some 15 per cent is in bonds, 23 per cent in specialist funds and the rest in unquoted equities and property.
St James's investments have 'a considerable emphasis on German zero-coupon bonds'.
Its net asset value per share, the company's preferred measure of performance, rose by 17.2 per cent during the six months to 30 September thanks to a combination of the increase in value of RIT and a rise in the value of other investments. In particular, the company has benefited from the positions it took in anticipation of declines in European short-term interest rates.
Pre-tax profit was pounds 14.1m compared with pounds 7m a year earlier. Unrealised dealing gains amounted to pounds 16.4m compared with pounds 4.1m.
Earnings per share are 5.9p compared with 3p and the interim dividend is constant at 1.5p.
Shares in RIT climbed 9p to 161p as the trust revealed that only 16 per cent of assets were invested in unquoted equities and indicated that this would fall further.
It also announced its intention to make monthly announcements of net asset value, which increased by 12 per cent to 202.9p. Profit before tax was pounds 4.4m against pounds 1.3m. Diluted earnings per share are 1.5p.
St. James's shares rose 1p to 171p.