Interim Management Statement

RNS Number : 6301X

Templeton Emerging Markets IT PLC

11 February 2013

 

Templeton Emerging Markets Investment Trust PLC ("the Company")

Interim Management Statement

For the three months ended 31 December 2012

This interim management statement relates to the period 1 October 2012 to 31 December 2012 and is the Company's second interim management statement for the financial year ending 31 March 2013, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.

OBJECTIVE

The Company's investment objective is to provide long term capital appreciation for its investors through investment in companies operating in emerging markets or whose stocks are listed on the stock markets of such countries.

FINANCIAL POSITION

	As at 31 December 2012 (unaudited)	As at 30 September 2012 (unaudited)
Total assets (Cum-income)	£2,112.6m	£1,986.1m
Total assets (Ex-income)	£2,086.2m	£1,962.3m
Net asset value (Cum-income)	644.2p	602.4p
Net asset value (Ex-income)	636.1p	595.2p
Share price	587.0p	555.0p
Discount (Cum-income)	8.9%	7.9%
Discount (Ex-income)	7.7%	6.8%

Share price is at the UK market closing mid price.

Net asset value is at closing bid prices. Assets are priced at local close or adjusted for fair value at US market close.

Further information can be found at www.temit.co.uk.

FINANCIAL PERFORMANCE

Performance to 31 December 2012 Share price Net asset value MSCI Emerging Market Index

3 Months % +5.8 +6.9 +4.9

1 Year % +8.0 +11.4 +13.4

3 Years* % +4.7 +5.7 +4.8

5 Years* % +6.0 +4.9 +3.5

10 Years* % +20.7 +19.5 +16.8

Share price Net asset value MSCI Emerging Market Index

Year to 31 December 2012 % +8.0 +11.4 +13.4

Year to 31 December 2011 % -17.8 -17.3 -17.6

Year to 31 December 2010 % +29.4 +28.2 +22.9

Year to 31 December 2009 % +96.0 +88.1 +59.4

Year to 31 December 2008 % -40.6 -42.9 -35.2

* Annualised rate of return

All figures in the performance table are calculated in Sterling on a total return basis i.e. with net dividends reinvested.

Source: Franklin Templeton Investments / Copyright - © 2012 Morningstar, Inc.  All rights reserved.

           MARKET VOLATILITY AND OUTLOOK

Market Volatility

Emerging markets experienced some volatility in the earlier part of the quarter as the on-going European debt crisis and the US presidential elections in early November led markets to pause after a strong performance in September. Markets traded within a narrow range until they started to recover in mid-November as the effects of monetary easing programs implemented by governments globally filtered through and financial markets became awash with liquidity. Improving data from China, including declining inflation and better export growth, also helped boost investor confidence, sending equity prices generally higher for the rest of the quarter.

Markets overcame initial concerns about the "fiscal cliff," a US$600 billion mix of automatic tax increases and spending cuts scheduled to take effect on January 1, 2013, to end the quarter with a gain. As a result, global markets were stronger in December, compensating for a relatively weaker October and November. Between 30 September and 31 December 2012, the net asset value of the Company increased by 6.9% to 644.2 pence. The Investment Manager (Templeton Asset Management Limited) continues to see emerging markets benefiting from relatively good growth prospects, attractive valuations and solid fundamentals and will continue to monitor the markets for favourable investment opportunities.

Outlook

Events in the developed economies of the US, Eurozone, and Japan this year will continue to impact the global economy at large, but the degree and magnitude of the action and reaction is shifting. Emerging markets, for instance, are lessening their trade dependence on the US and Europe, and there are other countries such as China which can drive global growth. In addition, a likely continuation of easy monetary policies in developed markets this year could result in more fund flows into global equity markets, including emerging markets.

Emerging markets in general have three characteristics in their favour: generally high economic growth rates, large amounts of foreign reserves and low foreign debt. Many emerging economies are on the cusp of consumer booms as well as productivity advances, which should bode well for future growth. As long-term investors, we believe the global outlook holds promise, despite debt problems plaguing the US and Eurozone. 

MATERIAL EVENTS AND TRANSACTIONS

There are no material events to report from the period 1 October 2012 to the date of this statement.

SHARE BUY BACKS

During the period, the Company bought back and cancelled 1,750,862 shares (which amount to 0.53% of the issued share capital) for a total consideration of £9,968,000.

INVESTMENT PORTFOLIO UPDATES AND OTHER COMPANY NEWS

In addition to the Half Yearly Report which was sent to investors in November, the Company has continued its efforts to keep shareholders informed about their investment in TEMIT. 

On a monthly basis, a factsheet and an investment commentary are posted to the Company's website - www.temit.co.uk and a link is emailed to all subscribers to the TEMIT email service.

The quarterly Portfolio Insight report for the end of December was released to the London Stock Exchange on 6 February 2013 and, along with the audio reports from the Investment Manager, was posted to the TEMIT website. A link to the report was also sent to those who have subscribed to the Company's email service.

The website is also updated daily with the latest Stock Exchange announcements, share prices and any Company news.

           PORTFOLIO CHANGES

          The Investment Manager reports the following principal changes in the portfolio:

Purchases (total value £5.4m)

PTT Exploration and Production Public Co. Ltd, fgn. (Existing holding)

TEMIT purchased a further 1,893,505 shares in PTT during this reporting period through a preferential public offering to enable PTT to finance its aggressive overseas expansion, which included the acquisition of Cove Energy, an oil & gas exploration and production company.

Sales

There were no portfolio sales during the three month period to 31 December 2012.

           Geographic Allocation

	% of net assets as at 31 December 2012	% of net assets   as at 30 September                    2012
LATIN AMERICA
Brazil	14.8	14.7
Mexico	2.4	2.1
ASIA
Hong Kong/China	26.1	25.7
Thailand	14.8	14.5
Indonesia	9.4	9.9
India	8.8	9.5
South Korea	4.5	4.6
Pakistan	2.2	2.1
Middle East
Jordan	0.1	0.1
EUROPE
Turkey	6.8	5.8
Russia	4.3	4.4
Poland	1.6	1.6
Hungary	0.9	1.0
Austria	0.8	0.9
AFRICA
South Africa	2.3	2.2
TEMIT's other current assets	0.2	0.9
Total	100.0	100.0

Sector Allocation

	% of net assets as at 31 December                  2012	% of net assets as at 30 September               2012
Financials	30.0	29.2
Energy	22.7	22.8
Consumer Discretionary	16.9	16.3
Materials	14.1	13.3
Information Technology	7.1	8.2
Consumer Staples	6.8	7.0
Industrials	2.2	2.3
TEMIT's other current assets	0.2	0.9
Total	100.0	100.0

Top Ten Holdings

Country	Security	Sector	% of net assets as at  31 December 2012	% of net assets as at  30 September 2012
Hong Kong/China	Brilliance China Automotive Holdings Ltd.	Consumer Discretionary	10.2	9.7
Brazil	Banco Bradesco SA, ADR, pfd.	Financials	4.4	4.4
Thailand	Siam Commercial Bank PCL, fgn.	Financials	4.4	4.3
Indonesia	PT Astra International Tbk	Consumer Discretionary	4.4	4.6
Brazil	Vale SA, ADR, pfd., A	Materials	4.3	4.0
Turkey	Akbank T.A.S.	Financials	4.3	3.7
Brazil	Itau Unibanco Holding SA, ADR	Financials	4.1	4.1
Hong Kong/China	Dairy Farm International Holdings Ltd.	Consumer Staples	4.0	4.4
India	Tata Consultancy Services Ltd.	Information Technology	4.0	4.6
Hong Kong/China	PetroChina Co. Ltd., H	Energy	3.2	3.2

The securities used to calculate the above NAV and industry percentages have been valued on a bid basis. The valuation of the assets is as at each local market close or, where appropriate, adjusted for changes in the fair value of these assets at US close.

This Interim Management Statement has been produced solely to provide additional information to shareholders of the Company to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purposes. In addition, the views, information and data in this publication should not be deemed as a financial promotion or recommendation.

Other than described above, the Board is not aware of any events during the period from 1 October 2012 to the date of this statement which would have had a material impact on the financial position of the Company.

Issued on behalf of the Board
Sara A MacIntosh
for and behalf of Franklin Templeton Investment Management Limited
Secretary

Date: 11 February 2013

End of interim management statement

For further information please contact Client Dealer Services at Franklin Templeton Investment Management Limited on UK freephone 0800 305 306 or [phone] for overseas investors.

 

END

 

 

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