REG - Utilico Emerging Mkt - Publication of monthly factsheet

Utilico Emerging Markets TrustAnnouncement

10/05/2024 13:30

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RNS Number : 0250O  Utilico Emerging Markets Trust PLC  10 May 2024

10 May 2024

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 marginally by 0.1% in April, underperforming
the MSCI Emerging Markets total return Index which was up by 1.4% in Sterling
terms in the month.

 

Markets in April were mixed with the US market battling against the stronger
than expected March inflationary data reported and the US Consumer Price Index
increasing by 0.4% pushing annual inflation up to 3.5% compared to 3.2%
reported in February. Resilience of the US economy was also evidenced via
stronger reported nonfarm payrolls data as well as better than expected retail
sales, indicating that inflationary pressures remain and subsequently
dampening market expectations of a cut in interest rates in June to
potentially only one or two cuts later this year. As a result, the S&P
Index was down by 4.2% in April.

 

The UK and European markets experienced a different story with
lower-than-expected inflationary numbers reported for March, resulting in the
Bank of England and the European Central Bank expected to now cut rates sooner
than the US Federal Reserve. The FTSE 100 was up by 2.4% for April with the
European markets mimicking the direction of the US and the Eurostoxx Index was
down by 3.2% in the month.

 

Emerging markets were also mixed. Turkey was the outperformer for the month
with the Borsa Istanbul (BIST) Index up by 9.9% as core inflationary pressures
eased slightly and the market now expecting headline interest rates peaking in
May at 75%. Argentina also performed strongly this month, up by 9.1%, with
investor sentiment seeing significant improvement amid structural economic
reforms led by Javier Milei, the recently elected president. For the first
time since 2008, Argentina achieved a quarterly fiscal surplus in 1Q24,
exceeding by a wide margin the targets set by the IMF. The Hong Kong Hang Seng
Index and Chinese Shanghai Index also increased by 7.4% and 2.1% respectively,
helped by the better than expected 1Q24 GDP result of 5.3%, indicating that
growth is on track to meet this year's government target of 5.0%. Chinese GDP
growth was boosted by manufacturing and infrastructure investment, despite the
property sector continuing to be a drag. The Indian Sensex Index continued on
its upward trajectory, up by 1.2% for the month as the country's general
elections started.

 

The Vietnam Ho Chi Minh Index in April was disappointingly down by 5.8%, as
the expectation of "higher for longer" US interest rates continues to put
pressure on the Vietnamese currency resulting in the Central Bank increasing
the 14 day reverse repo rate by 25bp. In Brazil, the Brazilian Bovespa market
was down by 1.7%, impacted by the delay in US rate cuts resulting in a
re-pricing of the yield curve but was also affected by the perceived increase
in fiscal risk caused by the government's decision to revise its 2025-26
fiscal targets.

 

In April, Sterling's performance was also mixed, up 2.6% versus the Brazilian
Real, 1.9% against the Philippine Peso and 1.7% against the Indonesian Rupee
but it was down by 3.4% against the Chilean Peso and 0.9% against the US
Dollar and Hong Kong Dollar.

 

PORTFOLIO

There were no changes to the constituents of the top thirty holdings in April.
UEM continued to see a number of its investee companies report strong
financial results in the month.

 

TAV's share price was up by 23.6%, benefitting from 1Q24 results being
stronger than expected with revenues up 27.8% and EBITDA increasing 96.8%.
Manila Water's share price was up by 10.7% as the market continues to see
strong momentum following strong results in March. Kunlun Energy's share price
was also up by 16.8% resulting from the positive momentum witnessed in the
Hong Kong market in April. Power Grid of India's share price was up by 8.8%
during the month.

 

Weaker price performance in April was seen at Serena Energia, down by 12.6%
following the release of data showing weak wind resources for the month.
Serena was also affected by the higher re-pricing of the Selic rate during the
month which also affected Eletrobras which was down by 10.9%. Nuam was also
down by 9.6% on the back of investors taking some profit after a strong
performance witnessed in March.

 

The valuation of UEM's unlisted investment, Petalite, was reduced by £2.1m
reflecting continued declines in the share prices of listed EV charging peers
and a difficult funding environment for early-stage companies. Petalite is
valued at £8.0m as at 30 April 2024, representing 1.5% of UEM's portfolio.

 

Portfolio purchases amounted to £6.4m and realisations totalled £2.1m

 

DEBT

UEM's debt remained at nil in the month as UEM repaid all amounts outstanding
under the £50m committed multicurrency revolving facility from The Bank of
Nova Scotia in March. UEM is currently in discussions regarding a replacement
revolving facility and a further announcement will be made in due course.

 

OTHER

UEM's share price ended April at 226.00p, increasing by 2.3% over the month
with the discount narrowing to 17.5% from 19.3%. UEM bought back 0.6m shares
at an average price of 222.77p in the month.

 

 

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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