Publication of monthly factsheet

RNS Number : 0117G

Utilico Emerging Markets Trust PLC

10 November 2022

 

10 November 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

UEM's NAV total return increased by 0.7% in October, significantly outperforming the MSCI Emerging Markets total return Index which declined by 6.0% in Sterling terms for the period.

There was little change in the global outlook, with investors still focussed on high inflation, rising interest rates, the continuing impact of the war in Ukraine and China's zero-Covid policy. Equity markets were in the most part positive for the month as a whole, with the US earnings season providing a catalyst for a recovery in valuations towards the end of the month.

The S&P 500 advanced by 8.0% in October. Mexico's Bolsa Index performance was particularly strong, up 11.9%. Brazil's Bovespa advanced by 5.5%, India's SENSEX Index gained 5.8% and the Philippines PSEi Index was up by 7.2%. However, there was weakness in China over policy concerns, with Hong Kong's Hang Seng Index falling by a further 14.7% in October, having fallen 13.7% in September. Vietnam's retail investor dominated market also declined sharply, with the Ho Chi Minh Index falling by 9.2% in October.

During the month, President Xi solidified his power at the National Congress of the Chinese Communist Party and commenced his historic third term. In Brazil, former President Lula da Silva was returned to power, after a narrow second round victory over Jair Bolsonaro and Malaysia called an early election for mid-November.

Central banks continue to raise interest rates. The ECB raised rates by 75ps to 2.0% at the end of October, with the Federal Reserve and Bank of England raising rates by 75bps at the beginning of November to 4.0% and 3.0% respectively. Market volatility was driven by speculation about when and at what level interest rates would peak.

Sterling recovered some of September's losses after Liz Truss was replaced as UK Prime Minister. The US Dollar continued to strengthen against many currencies, although Sterling did appreciate against the US Dollar by 3.1%. The Brazilian Real also appreciated against the US Dollar, declining by just 0.1% against Sterling. In contrast, October saw weakness in the Chinese Yuan which fell by 5.8% against Sterling, the Vietnamese Dong, having traded recently in a close peg to the US Dollar, declined 6.9% as the trading band was widened. The Indian Rupee declined by 4.7% against Sterling and there was a sharp, but not unexpected, devaluation in the Egyptian Pound, which fell 21.3% against Sterling in the month. UEM exited its holding in Telecom Egypt prior to this decline.

PORTFOLIO

Performance across the portfolio in October was mixed and seemed to be driven primarily by country rather than company specific or sector considerations. Many companies in Brazil and Mexico surged strongly, whilst holdings in China and Vietnam were generally weaker. Within the top thirty there was one change, with Brazil's Vamos replacing China Gas. Vamos leases commercial vehicles and agricultural machinery across Brazil and its share price gained 17.9% in October.

A number of other Brazilian companies posted gains, including Rumo, which rose by 19.8%, Santos, up by 18.9%, Eletrobras, up by 18.1%, Simpar, up by 12.0% and Orizon was up 11.8%. The Mexican airports also surged, with OMA's share price up 25.1% and GAP up 20.5%. In Chile, Engie Energia gained 16.3% and in Asia, there was a strong rebound in ICT's share price, which rose by 10.3% in October. China Datang Renewable Power gained 15.8%, in contrast to negative performances from most of UEM's Chinese holdings.

The most notable decliners in October were Kunlun Energy, which declined by 17.5%, Citic Telecom was down by 9.1%, Vietnam Opportunity Fund was down by 9.7% and FPT Corp's share price fell by 6.0% despite very strong Q3 results.

During October, purchases for the portfolio totalled £10.4m and realisations totalled £17.2m.

DEBT

UEM's bank debt increased from £20.2m to £25.8m with an additional EUR 7.0m drawn during the month. The debt is all drawn in Euros totalling EUR 30.0m at the month end.

OTHER

UEM's share price ended October at 203.00p, down 3.8% over the month. The discount to NAV widened significantly to 17.2% from 13.3%. UEM is continuing to take advantage of the discount, buying back 2.0m shares at an average price of 211.63p.

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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