Publication of monthly factsheet

RNS Number : 3315Q

Utilico Emerging Markets Trust PLC

17 February 2023

 

17 February 2023

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 increased by 4.1% in January, which was behind the MSCI Emerging Markets total return Index which was up by 5.9% in Sterling terms for the period.

Markets were mostly upbeat in January, helped by improved sentiment on China's re-opening and indications that inflation was easing across many major economies. In the US headline CPI fell to 6.5% from 7.1%, with the Federal Bank hinting at a nearing of the end of the rate increase cycle, helping propel the S&P 500 Index which was up by 6.2% in the month. European markets were even stronger, with the Eurostoxx up 9.7% as the Eurozone PMI hit a seven-month high.

EM benefitted from the risk-on environment. In China the manufacturing PMI surprised positively at 50.1 in January, up from 47.0 in December 2022, hitting expansionary territory after four months of sequential contraction. The service sector also jumped, as several large cities announced that Covid virus caseloads had peaked mid-month, prompting many to travel and socialise in the Lunar New Year celebrations. According to the Ministry of Culture and Tourism spending during the holiday recovered by 30% from a year ago. Hong Kong's Hang Seng Index was up 10.4% and the Shanghai Composite rose by 5.4% in January.

In Brazil, President Lula unsettled markets with statements on enhancing social programs, loosening the fiscal regime and inflation targets, and questioning the independence of the Central Bank. Bolsanaro-supporting protesters stormed the Congress in the country's capital. Against this turbulent backdrop, the Bovespa still managed a 3.4% gain. Meanwhile, the markets in Mexico, Vietnam and Korea performed strongly, with the Mexico Bolsa up 12.6%, the Ho Chi Minh Index up 10.3%, and the Kospi up 8.4%.

Indian markets notably underperformed, with the Sensex falling 2.1% in January. This was mainly due to the release of a short-sellers research report into the Adani group companies, alleging share price manipulation and accounting fraud. At the time of the report UEM's only direct exposure to an Adani entity was a small position in Adani Ports which has subsequently been exited.

Sterling was mixed, strengthening 2.3% against the US Dollar and 1.4% versus the Indian Rupee, but weakening 1.3% against the Brazilian Real, 4.0% versus the Chilean Peso, and 1.3% against the Mexican Peso.

PORTFOLIO

The majority of investments in UEM's portfolio posted share price increases during January, with one change to the top thirty as Vamos re-entered as its share price rose by 15.7%, replacing TAV. In Brazil there were robust share price performances for Santos, up 12.9%, and Orizon, up 14.4%, recovering off of recent lows. UEM's Mexican airport investments appreciated strongly, with OMA and GAP's share prices up 14.9% and 16.1% respectively. Both companies posted continued strong recoveries in passenger numbers, with GAP guiding for double-digit revenue and EBITDA growth in 2023.

Elsewhere, notable performances were delivered by China Datang Renewables, with its share price up by 11.7%, Kunlun Energy up 11.0%, and KINX up 16.1%. It was pleasing to see Inpost continue to deliver good results, beating consensus with volumes up 23% in Q4. Inpost's share price was up by 12.2% over the month.

Modest positive share price movements were seen elsewhere, with FPT up 8.9%, China Gas up 7.0%, MyEG up 5.8% and CITIC Telecom up 5.3%. Only five investments in the top thirty saw share price declines, all of which were comparatively modest - as evidenced by the worst performance being Telelink, down by 2.2%.

During January, purchases for the portfolio totalled £5.8m and realisations totalled £14.9m.

DEBT

UEM's bank debt declined from £26.1m to £25.2m and was drawn as EUR 12.0m and USD 18.0m.

OTHER

UEM's share price ended January at 216.00p, up 3.3% over the month. The discount to NAV widened slightly to 14.0% from 13.3%. UEM bought back 75,000 shares at a price of 219.00p in the month.

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]

 

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