REG - Utilico Emerging Mkt - Publication of monthly factsheet

Utilico Emerging Markets TrustAnnouncement

18/10/2022 17:45

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221018:nRSR3212Da&default-theme=true

RNS Number : 3212D  Utilico Emerging Markets Trust PLC  18 October 2022

18 October 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 September, UEM's NAV total return decreased by 4.4%, outperforming the MSCI
Emerging Markets total return Index which was down 7.8% in Sterling terms for
the period.

 

Global markets in September were gloomy with the majority of markets except
for Brazil witnessing losses. Fighting inflation became paramount on most
central banks' agendas, irrespective of the implication for capital markets
and was clearly demonstrated by the US Federal Reserve who raised interest
rates for a third consecutive 75bps increase in September to 3.25%. The
European Central Bank and the UK Central Bank also increased rates, with
deposit rates now at 0.75% and 2.25% respectively, as both grapple with
inflationary levels estimated at near 10.0%. The shutdown of Nord Steam 1
(natural gas pipeline from Russia to Germany) in September also failed to help
calm inflationary nerves, raising concerns over energy supplies as Europe
starts to head into the winter. Subsequently the S&P Index was down 9.3%,
the Eurostoxx down 5.7% and UK FTSE 100 down 5.4%.

 

The emerging markets overall fared worse as broad macroeconomics volatility as
well as currency weakness took a toll. The rising fears of a global slowdown
as well as the war in Ukraine, along with the simmering tensions between China
and Taiwan further contributed to the negative sentiment in the markets. The
ongoing pursuit of a zero Covid-19 policy in China, further dampened the
market, reflected in the Hong Kong Hang Seng Index being down 13.7% and the
Shanghai Composite Index down 5.6%. The Philippines PSEi Index was also down
12.8% and the Vietnamese VNI Index down 11.6%.

 

The Brazilian Bovespa was one of the few markets in positive territory in
September up 0.5%, boosted by the Brazilian Central Bank decision to keep the
Selic rate at 13.75% indicating that the country could be near the end of its
tightening period as inflation rates in 2023 are expected to see a material
step down. The upcoming Presidential election with both candidates, Lula and
Bolsonaro, also being known quantities has calmed market concerns, especially
as the newly elected Congress remains controlled by centre / centre right
parties.

 

Global exchange rates have been hampered by the rising US interest rates which
have continued to fuel the strength of the US Dollar. The Euro was sent to a
20 year low against the Dollar whilst Sterling against the Dollar in September
was down a further 4.3%. The pressure on Sterling was further increased by a
questionable 'mini budget', announced by the newly elected UK Prime Minister
Liz Truss, which failed to ease market concerns over the rapidly widening
current account deficit. The Bank of England subsequently had to step in
temporarily buying long dated gilts, enabling Sterling to recover from an
all-time low against the US Dollar. Sterling also depreciated against the
Mexican Peso, down 4.1%, the Hong Kong Dollar down 4.1% and Vietnamese Dong
down 2.3%. Sterling appreciated 3.0% against the Chilean Peso.

 

PORTFOLIO

Performance across the portfolio in September was mixed, with one third of the
portfolio up, whilst the remaining two thirds down reflecting the general mood
of the market. There were two changes to the constituents of the UEM top
thirty with Engie Brasil Energia and Inpost replacing Corp Financiera
Colombiana and Naver Corp. Engie Brasil is one of the largest power generation
companies in Brazil, with 8.5GW installed capacity, of which 96% is renewable.
It also has investments in gas and electricity transmission assets. Inpost,
listed on the Amsterdam Stock Exchange, is a dominant delivery service
provider in Poland with automated parcel machines and a drive to gain a bigger
presence in both France and the UK. Inpost's share price was up 17.1% in
September boosted by better-than-expected 2Q22 results.

 

Another strong performer in the portfolio in September was Orizon, its share
price was up 12.0% being spurred along by better investor awareness of Orizon
as well as an expectation that 3Q22 results should be strong. MyEG was also up
5.6% and Powergrid Infrastructure Investment Trust was up 2.1%. Weaker share
price performances continued to be seen with the Chinese gas companies. Kunlun
and China Gas Holdings were down 17.1% and 15.4% respectively due to the
combination of high international LNG prices and weak industrial activity in
China impacting natural gas demand, whilst lower real estate activity is
affecting new gas connections.

 

UEM has started to receive capital distributions from CGN Capital Partners
following the completion of the sale of CGN assets to Sembcorp Industries in
June 2022. It is envisioned that the majority of the investment in CGN will be
realised over the coming twelve months.

 

During September, purchases for the portfolio totalled £7.6m and realisations
totalled £11.8m.

 

DEBT

UEM's bank debt increased from £19.9m to £20.2m due to FX movements, with
the debt all drawn in Euros and unchanged at EUR 23.0m over the month.

 

 

OTHER

UEM's share price ended September at 211.00p, down 4.5% over the month. The
discount to NAV narrowed slightly to 13.3% from 13.8%. UEM is continuing to
take advantage of the discount, buying back 2.0m shares at an average price of
220.00p.

 

 

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

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DOCBKFBNABDDCKD