Publication of monthly factsheet

RNS Number : 5992V

Utilico Emerging Markets Trust PLC

10 August 2022

 

10 August 2022

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

In July, UEM's NAV total return increased marginally by 0.1%, slightly outperforming the MSCI Emerging Markets total return Index which decreased by 0.2% in Sterling terms for the period.

During July, the majority of global equity markets rebounded as the US Federal Reserve indicated that the pace of policy tightening that has been witnessed recently may relent from here, implying that an interest rate cut could be on the horizon in 2023. This anticipated pivotal change in policy arose as the US reported a second quarter of negative GDP growth of 0.9% implying that the US is technically in recession, albeit the strong labour market means that it is unlikely to be formally declared. Nevertheless, strong inflationary pressures remain with the US in July reporting a consumer price index increase of 9.1%.

The change in direction of the Federal Reserve's interest rate policy supported growth assets, helping the S&P Index increase by 9.1% in July and the Brazilian Bovespa increase by 4.7%. India also benefitted resulting in the SENSEX Index increasing by 8.6% but was also boosted by lower energy prices over the month of July as well as Modi's government reversing the windfall tax on local crude oil sales and fuel exports. The Chilean IPSA Index was also up by 6.2% during the period.

China was one of the outliers in July with the Shanghai Composite down by 4.3% and the Hang Seng Index down by 7.8%. President Xi's zero tolerance Covid-19 policy continued to dampen the markets as the spread of the Omicron variant resulted in tight new covid lockdown measures being implemented across several cities. Concerns around the property sector also continued to increase, whilst economic data published in July was mixed with 2Q GDP expanding at its slowest rate since 2020 at 0.4% y-o-y, yet June's exports data reporting 17.9% growth y-o-y.

Sterling performance in July was mixed, appreciating by 2.7% against the Euro, 2.8% against the Thai Baht, 2.4% against the Romanian Leu and marginally up against the US Dollar by 0.2%. However, Sterling depreciated by 3.6% against the Chilean Peso, 1.3% against the Australian Dollar and 0.4% against the Brazilian Real.

PORTFOLIO

There were two changes to the constituents of the top thirty holdings of the portfolio in July. KT Corp, the leading telecoms operator in South Korea replacing Corp Financiera Colombiana and Naver Corp, a fast growing Korean internet giant, being the market leader in search, advertising and e-commerce, also in South Korea replacing China Everbright Environment Group. Both stocks re-entering the top thirty on the back of a recovery of share price performance following sharp falls in June.

Performance across the portfolio was mixed. There were a few strong performers in July with Simpar up by 11.2% and Rumo was up 9.8%. Both regaining some of the loss witnessed in June, reflective of growth stocks in Brazil benefiting from the changing expectation that interest rates could start to fall in 2023. KINX and Naver Corp were also up by 9.4% and 7.9%, respectively, benefiting from share price recovery.

There were some weak performers in July in the portfolio, China Datang Corp Renewable Power was down by 20.0%. The majority of Chinese wind power operators underperformed due to market concerns around weaker demand growth and higher wind power curtailment in 2Q22. There was also some market speculation regarding potential future restrictions on offshore wind projects in eastern China reportedly linked to the recent geopolitical tensions. China Everbright Greentech was down by 17.3% due to management issuing a profit warning that 1H22 could expect to see a 40% YoY decline in earnings due to significant increases in raw material costs and weak demand for waste as a result of regional Covid-19 controls in China. MyEG was down by 12.0% as continued concerns that covid related revenues could reduce as Malaysia drops quarantine and testing requirements for entry.

Pleasingly a number of UEM investments reported results for the second quarter well ahead of expectations. ICT reported volumes and revenues for the second quarter at record levels and profit before tax up 54.0%. On UEM's website under the news feeds there is a number of links to recent portfolio news - https://www.uemtrust.co.uk/news/media

DEBT

UEM's bank debt increased from £15.5m to £19.3m, all drawn in Euros which was up from EUR 18.0m as at the end of June to EUR 23.0m as at the end of July. During July, purchases totalled £8.9m and realisations totalled £7.1m.

OTHER

UEM's share price ended July at 207.00p, same as June. The discount to NAV widened slightly to 14.0% from 13.9% with UEM continuing to take advantage of the discount in July and bought back 0.9m shares at an average price of 208.52p.

On 28 July 2022, the ICM investment team presented to a number of private investors on the Investor Meet Company platform, you can watch the presentation via this link - https://www.uemtrust.co.uk/investor-relations/analyst-research

Name of contact and telephone number for enquiries:

ICM Investment Management Limited  [phone]

Charles Jillings / Alastair Moreton

Montfort Communications

Gay Collins, Pippa Bailey  [phone]

[e-mail]

 

END

 

 

DOCBKKBBBBKDOFD