Publication of monthly factsheet

Utilico Emerging Markets Trust PLC

15 May 2023

 

15 May 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 0.9% in April, outperforming the MSCI Emerging Markets total return Index which was down by 2.9% in Sterling terms.

In April, the markets continued to be mixed. The US, Europe and the UK witnessed modest gains, on the back of more resilient economic data as the S&P 500 was up by 1.5%, the Eurostoxx was up by 1.0% and the FTSE 100 was up by 3.1%. However positive investment sentiment was tapered as the Federal Reserve continued to indicate that the rolling over of interest rates is unlikely to happen this year and economic growth is likely to soften. Cracks within the banking sector also continued to appear as the banking crisis of 2023 claimed its largest US victim to date as the First Republic Bank collapsed.

China was one of the worst performing markets in April, with the Hang Seng down by 2.5%. This was despite reporting strong export data of 14.8% and low inflation of CPI of +0.7% for March, as well as better than expected 1Q23 GDP growth of 4.5%. Ongoing US-China tensions continued to weigh on market sentiment and comments from the Politburo meeting at the end of the month raised concerns about the government's plans to support economic growth. Thailand also saw negative returns for the month, down by 5.0% as investors removed some risk before the upcoming elections in mid-May. Indonesia and India however performed well up by 1.6% and 4.1% respectively, with Indonesia announcing intentions to focus on becoming a global player of nickel, tapping into the EV market, whilst India's central bank surprised the market by keeping interest rate unchanged for the month on the back of more positive macro data.

Latam also saw positive performance in April, with the Bovespa Index up by 2.5%, the Chilean IPSA up 1.7% and the Mexican Mexbol Index up by 2.3%. The Bovespa's outperformance was driven by a combination of factors, including the unveiling of the long-awaited fiscal framework which introduced a cap on public expenditure growth based on accumulated revenues, and the presence of inflation below expectations. Both factors are increasing the possibility of potential monetary easing in 2H23. The positive performance of the Chile Index was driven by the banking and sanitation sectors, which have been bolstered by increased foreign inflows and a reduced perception of regulatory risk.

During April, Sterling broadly strengthened against most currencies, appreciating by 1.7% against the US Dollar and 2.5% against the Chinese Renminbi. Sterling was flat against the Euro and marginally depreciated against the Indonesian Rupee and Romanian Leu by 0.5% and 0.3% respectively.

PORTFOLIO

UEM's portfolio had a mixed performance in April. There was one change to the top thirty, with Bolsa de Valores de Colombia ("BVC") replacing Grupo Traxion. BVC is the Colombian Stock Exchange, and the share price was up by 7.4% during April. There has been heightened investor interest in BVC, driven by positive developments regarding the merger of the Colombian, Chilean, and Peruvian exchanges, as well as a decrease in the local market's risk premium, which was attributed to the Colombian Congress's indications of checks-and-balances to restrain President Petro's more radical policies.

UEM's portfolio witnessed some strong performances in April with Umeme's share price up by 22.4%, still benefiting from the strong results and dividend announced in March. Kunlun Energy was up by 18.3%, as it also announced solid FY22 results with EPS up 30.0%. Inpost's share price increased in April by 14.8% and Gujarat State Petronet was up by 8.4% as the Gujarat state government announced minimum pay-outs from SOEs which should see a significant step-up in dividends and potentially buybacks going forwards.

Negative share price performances were witnessed by Kinx, down by 11.3%, and by GAP which was down by 9.0% despite solid 1Q23 results as a newly proposed concession bill in Mexico has created uncertainty around GAP's airport concession.

During April, purchases for the portfolio amounted to £6.3m and realisations totalled £8.5m.

DEBT

UEM's bank debt increased from £35.1m to £36.4m and was drawn as USD 20.0m, EUR 12.0m and GBP 10.0m.

OTHER

UEM's share price ended April at 220.00p, up 1.4%. The discount to NAV narrowed slightly to 13.1% from 13.5%. UEM bought back 100,000 shares at an average price of 216.91p 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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