Utilico Emerging Markets August 2024 Monthly Update

Mark Lebbell, Senior Analyst for Utilico Emerging Markets Trust (UEM), provides an insight on the fund’s performance in August, 2024.

UEM’s NAV total return was marginally up in August.

This was a slightly better performance than the MSCI Emerging Markets total return index, which was down by 0.6% in Sterling terms in the month.

August started with a sharp sell-off in many markets, triggered by the first rise in Japanese interest rates for 17 years and fears over the US going into recession.

In the US the S&P 500 was up 2.4% during the month, and the NASDAQ composite gained 0.6%.

The first longer weighted rate cut by the Federal Reserve was widely expected to be announced at its September meeting.

This rate cut should be positive for Emerging Markets. Many EM stock markets gained in August in anticipation of this. Markets were up 6.5% in Brazil, 4.2% in the Philippines, 2.6% in Vietnam, and 0.8% in India.

Business and consumer confidence in China remains weak, and the Shanghai Composite Index fell 3.3%, approaching levels not seen since the covid crisis of early 2020 in contrast, though Hong Kong's market was up 3.7%.

There were two changes to the top 30 holdings in August, SUNeVision Holdings and ISA, replaced Kaspi and Pertamina Geothermal Energy, primarily due to relative price performance. SUNeVision is Hong Kong's leading data center operator, whilst ISA, which is headquartered in Colombia, operates electricity transmission assets, at toll road concessions across Latin America. Strong performers in August included SUNeVision up 22.6% on results and outlook.

Ocean Wilsons was up by 17.5% after the company confirmed it was in talks over a potential sale of its stake in Brazilian port operator Wilson Sons and International container Terminals, was up by 11.9% after it released another strong set of results.

UEM’s share price was unchanged during the month, ending August at 223p per share. During August, UEM announced that a £50m multi-currency facility with Barclays Bank PLC on a secure basis. The initial term is one year, and is expected that the first drawing on the facility will take place in September. The quarterly dividend of 2.15 pence per share and ex dividend on 5th of September will be paid to shareholders on the 27th.