Publication of monthly factsheet

Utilico Emerging Markets Trust PLC

10 December 2024

 

10 December 2024

UTILICO EMERGING MARKETS TRUST PLC

(LEI Number: 2138005TJMCWR2394O39)

Publication of monthly factsheet

The latest monthly factsheet for Utilico Emerging Markets Trust plc ("UEM" or the "Company") will shortly be available through the Company's website at:

https://www.uemtrust.co.uk/investor-relations/factsheet-archive

Monthly commentary

PERFORMANCE

UEM's NAV total return was down in November by 2.3% outperforming the MSCI Emerging Markets total return Index which was down by 2.6% in Sterling terms during the month.

Global markets in November were dominated by one thing, the US election with the Republicans winning the White House and the Senate. The US market reacted positively given President Trump now has robust electoral bases to implement his policies of trade, taxes, immigration and deregulation, with the focus being primarily on improving the domestic economy. The S&P 500 Index subsequently reached an all-time high during the month, up by 5.7%, whilst the Dow Jones Industrial Average Index was up by 7.5% and the US Dollar appreciated against Sterling by 1.1%.

However uncertainty remained in the global markets with regards to how expansionary Trump's fiscal policy will be, at a time when inflation remains elevated. This resulted in the US Federal Reserve signalling a more cautious path for interest rate reductions. Further uncertainty remained over what the magnitude of Trump's potential trade tariffs could be, especially with regards to China where Trump has threatened up to 60% tariffs on imports. The Hong Kong Hang Seng Index was subsequently down by 4.4%, now having surrendered a large part of the gains witnessed in early autumn that arose on the back of promised stimulus that has failed to materialise. All eyes are now focused on the mid December Economic Work Conference for further stimulus to boost private consumption. Nevertheless, the Shanghai Composite was up 1.4% for the month as the Index has more domestic investors.

With the prospects of a more buoyant US market, a stronger US Dollar, a tighter Federal policy as well as higher tariffs, other emerging markets also came under pressure as many witnessed outflows from foreign investors. Within Asean, Indonesia was down by 6.1% as it has a higher exposure to foreign investors, whilst the Philippines was down by 7.4%. Vietnam was down by 1.1% also affected by additional uncertainty surrounding proposed tariffs. India, despite having a lower exposure to the US, was also down marginally by 0.3% as it saw an improvement at the end of the month on the back of President Modi's BJP party winning a key state election of Maharashtra.

In Latam, Mexico continued to see pressure, with the Mexbol Index down by 1.7% as Trump's threat of tariffs continues to be an overhang. The Brazilian Boverspa was also down by 3.1% as the long awaited fiscal package to better balance the country's fiscal accounts was weaker than expected. As a result, the Brazilian Real depreciated against Sterling by 1.9% with expectations of a rise in the SELIC interest rate will likely be required on the back of potentially higher inflationary pressures. Argentina was the shining light in Latam during the month, with the Merval Index up by 22.2% on the back of continued positive sentiment tied to President Milei's policies and early indications of economic improvement, further bolstered by Trump's support. Within EMEA, Turkey was also up by 8.9% recovering some of the ground lost earlier in the year.

PORTFOLIO

There was one change to the top thirty holdings in November. Piraeus Port Authority ("PPA") replaced Terna Energy. PPA is listed on the Athens Stock Exchange and owns the concession for Piraeus Port in Greece, operating container, cruise, coastal and car terminals and is 67% owned by Cosco Shipping Ports. In FY23, the port handled 5.1m container boxes (TEUs) and is one of Europe's top five largest container terminals.

The portfolio had mixed share price performances in November. TAV Airports' share price was up by 19.1%, assisted by more positive market sentiment as well as recovering some ground for prior months weakness as the stock is now more attractively valued, whilst PPA's share price was up by 11.6% based on improved market expectations. Sunevision, the Hong Kong listed data centre was also up by 8.0% as the stock continues to benefit from increased demand for data centres on the back of the huge growth of AI. Aguas Andinas was also up by 6.9% as the Chilean Water company finally received its long awaited tariff increase of 5.0%.

Share price weakness for the month was seen primarily with the Brazilian companies on the back of the disappointing fiscal package that was announced. Serena, the renewable energy company was impacted the hardest during the month, down by 24.3% suffering from being a small cap with low liquidity alongside Orizon which was down by 10.0%. Ocean Wilsons was also down by 11.2% affected by the poor market sentiment and weaker Brazilian Real.

Portfolio purchases amounted to £9.5m and total realisations were £5.8m.

DEBT

UEM's debt at the end of November remained at £20.1m and was drawn in US Dollars (USD 15.0m) and Euros (EUR 10.0m).

OTHER

UEM's share price decreased in the month by 5.2%, ending November at 200.00p. The discount to NAV widened to 22.0% from 20.3%. UEM bought back 0.3m shares at an average price of 209.47p in the month, taking the total shares bought back in the eight months to 30 November 2024 to 3.7m, equivalent to 1.9% of the share capital as at 31 March 2024.

On 21 November 2024, UEM declared an increased second quarterly interim dividend of 2.325p per ordinary share in respect of the year ending 31 March 2025, an uplift of 8.1% on the last quarter dividend. This will be paid on 19 December 2024 to shareholders on the register on 29 November 2024.

Name of contact and telephone number for enquiries:

ICM Investment Management Limited                                 [phone]

Charles Jillings / Alastair Moreton

Montfort Communications

Gay Collins, Nita Shah                                                           [phone]

[e-mail]

 

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