REG - Utilico Emerging Mkt - Publication of monthly factsheet

Utilico Emerging Markets TrustAnnouncement

10/08/2022 13:30

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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
(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 (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
(https://www.uemtrust.co.uk/investor-relations/analyst-research)

 

 

Name of contact and telephone number for enquiries:

ICM Investment Management
Limited
+44(0)1372 271486

Charles Jillings / Alastair Moreton

 

Montfort Communications

Gay Collins, Pippa
Bailey
+44(0)20 3770 7913

utilico@montfort.london

 

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