REG - Utilico Emerging Mkt - Publication of monthly factsheet

Utilico Emerging Markets TrustAnnouncement

06/03/2023 14:15

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RNS Number : 0436S  Utilico Emerging Markets Trust PLC  06 March 2023

6 March 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
(https://www.uemtrust.co.uk/investor-relations/factsheet-archive)

 

Monthly commentary

 

PERFORMANCE

UEM's NAV total return decreased by 2.6% in February, performing better than
the MSCI Emerging Markets total return Index which was down by 4.7% in
Sterling terms for the month.

 

Unlike the positive "risk-on" market rally witnessed in January, fuelled by
falling inflation data and expectations that key central banks are nearing the
end of their aggressive interest rate rising cycle, February saw the majority
of markets experience weakness and becoming "risk-off". This swing in markets
was driven by stronger than expected economic data, such as indications of a
continued tight labour market from the US, indicating that a recession may not
be on the horizon and subsequently inflationary pressures could persist for
longer, resulting in the reduction of interest rate cuts to come later and
possibly at a slower pace than anticipated. The US Federal Reserve Bank's
Chairman Jay Powell also indicated that further rate increases are likely,
especially if strong macro data continues to persist. During February, the
Federal Bank increased rates by 25bps to 4.75%, whilst both the Bank of
England and the European Central Bank increased by 50bps raising interest
rates to 4.0% and 2.5% respectively. The S&P Index was therefore down for
the month by 2.6%.

 

The Hang Seng Index declined in February by 9.4%, despite the expectation that
the re-opening of China post Covid-19 might lead to a rapid consumption boom
due to the high amount of savings built up during lock down. Continued
geopolitical tension led to some profit taking. The Chinese A-share market
weathered the geopolitical pressures better as the Shanghai Composite was
essentially flat for February, up marginally by 0.7%. Other Asian markets also
saw weakness, with the Philippines PCOMP Index down by 3.5%, the Thai SET
Index down by 2.9% and the Vietnamese market down by 7.8%. The Vietnam Ho Chi
Minh Index was also impacted by ongoing pressure arising within the property
market as the second largest developer delayed a repayment of a bond, widening
concerns about the property debt crisis.

 

The Brazilian Bovespa also declined by 7.5% in February, due to deterioration
of investors' sentiment in the face of uncertain economic policy. This,
combined with a dispute between the Brazilian Central Bank and Lula's
government, unsettled the markets. The market is pricing no rate cuts this
year, even though Brazil has one of the highest real interest rates in the
world. The Mexican Bolsa was also down 3.3%.

 

Sterling was mixed, strengthening 2.8% against the Australian Dollar, 3.5%
against the Malaysian Ringgit and 4.7% against the Thai Baht, but weakened
1.7% against the US Dollar, 4.1% against the Mexican Peso, and 1.5% against
the Hong Kong Dollar. Notably the US Dollar had its first positive month since
September 2022, benefitting from the expectation of an extended US monetary
policy tightening cycle.

 

PORTFOLIO

Performance across UEM's portfolio in February was mixed with two changes to
the top thirty as Aguas Andinas replaced My EG and Grupo Traxion replaced
Chindata. Aguas Andinas is the largest water and sanitation company in Chile.
Its main concession area is the metropolitan region of Santiago, with its
other major region in the North of the capital (Aguas Cordillera and Agias
Manquehue). Grupo Traxion is a Mexican land transportation and logistics
company that is currently benefitting from nearshoring as it is operating in
the cargo, logistics solutions, and personnel and student transportation
segments.

 

During the month, Kinx witnessed a share price increase of 11.7% driven partly
by solid full year results, whilst Umeme, the Ugandan electricity distribution
company, who announced in December 2022 that its concession will not be
renewed but will be compensated for unrecovered investment, increased by 7.1%.
Grupo Aeroportuario Del Pacifico, the Mexican airport operator, was also up by
7.0% on the back of continued robust results. Eletrobras' share price was down
in February by 15.3% due to the sharp decrease in energy spot prices resulting
from a significant improvement in reservoir levels and a potential oversupply
of energy generation in the country. Inpost was also down by 11.4% and
Telelink down by 10.4% on news that the minimum dividend pay-out ratio may be
cut to fund growth or merger and acquisition opportunities. Overall, the
portfolio saw fifteen companies witness share price increases and the
remaining half, share price declines.

 

During February, purchases for the portfolio totalled £13.9m and realisations
totalled £7.0m.

 

DEBT

UEM's bank debt marginally increased from £25.2m to £25.4m and was drawn as
EUR 12.0m and USD 18.0m.

 

OTHER

UEM's share price ended February at 211.00p, down 2.3% over the month. The
discount to NAV narrowed slightly to 13.7% from 14.0%. UEM bought back 0.9m
shares at an average price of 215.80p in the month.

 

A third quarterly interim dividend of 2.15p per ordinary share in respect of
the year ending 31 March 2023 was declared, which will be paid on 24 March
2023 to shareholders on the register on 3 March 2023.

 

 

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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