Deputy Portfolio Manager, Jacqueline Broers, highlights the strong performance of the fund for July 2023. She highlights the global market moves across South America, Vietnam and China (including HK) and discusses the strong performance of portfolio companies TTS and FPT following recent financial results.
Hello, welcome to the July monthly update for Utilico Emerging Markets (UEM) I'm Jacqueline Broers Deputy Portfolio Manager.
Year-to-date, UEM’s net asset value total return continues to be strong, up 13.3% significantly outperforming the MSCI Emerging Markets index, which in sterling terms is up only 4.8%.
In July, UEM saw its NAV total return up 3.1%, whereas the MSCI Emerging Markets index was up 5.1%.
So what has happened in July?
The majority of equity markets have continued to rally supported by global inflation appears to be slowing down.
We saw both the US and European Central Bank's increasing interest rates, also indicating they may be near the end of their tightening cycles.
In Latin America, and in particular, in Brazil, where UEM has 24.8% of its portfolio. The market was up by 3.3% as it continues to wait for the Central Bank to start cutting interest rates, which is now expected in August.
However, in Chile, where UEM has 4.7% of its portfolio, the Central Bank did cut interest rates by 100 basis points to 10.25%.
More than was expected by the market resulting in the Chilean market being up 10.5% for the month.
Within Asia, Vietnam 7.5% of us portfolio.
We also witnessed strong performance for the month with the index up 9.2% as market confidence was boosted by an improvement in GDP numbers.
China including Hong Kong, now 13.6% of the portfolio, so the Shanghai and Hang Seng Index increased by 2.8% and 6.1% respectively, as the Chinese government announced new measures, although little detail to help revive consumption and support the property sector.
Within UEM’s portfolio strong performances were witnessed in July by Transport Trade Services up 17.9% and FPT Corp up 13.7%, both benefiting from solid second quarter results.
