Utilico Emerging Markets Regulatory News (UEM)

13 September 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

Monthly commentary

PERFORMANCE

UEM's NAV total return decreased by 4.0% in August, this decline was smaller than that of the MSCI EM total return Index ("MSCI") which was down by 4.7% in Sterling terms. Year to date, UEM's NAV total return has increased by 8.7% and significantly outperforming the MSCI, which was down by 0.1% in Sterling terms over the same period.

After strong performance in June and July, equity markets were mostly weaker in August, reacting to mixed economic statistics that add uncertainty to the market outlook. In the US, consumer and government spending remains strong, but the housing market has stalled, and the number of job vacancies continue to decline. Following July's rate increase, analysts expect one final rate rise this year from the Federal Reserve, but probably not at September's meeting. The Bank of England raised rates by 25bps during the month, following the European Central Bank's similar rate rise at the end of July. The S&P 500 declined by 1.8%, the FTSE 100 declined by 3.4% and the Eurostoxx Index was down by 3.9%.

In China, market confidence remains low and international investors continue to reduce their exposure to the country. Weakness in the housing market, concerns over real estate developers' debt and slowing factory activity all weighed on stocks. China has cut interest rates and reduced deposit requirements for real estate in an attempt to stimulate the housing market. China's consumer price index in August was back in positive territory, albeit up just 0.1% following the deflationary decline of 0.3% in July. The Hang Seng Index declined by 8.5% in August and the Shanghai Composite fell by 5.2%.

Many other emerging markets were weaker in August, with industrial commodity prices declining on the weak Chinese outlook. Latin American markets followed the lead of US markets, with Brazil's Bovespa Index decreasing by 5.1%, Chile's IPSA Index down by 6.0% and Mexico's Bolsa Index down by 3.3%. In Asia, most markets also declined with India's SENSEX Index down by 2.5% and the PSEi Index in the Philippines decreased by 6.3%. There was however a 0.1% gain in Vietnam's Ho Chi Minh Index and the Jakarta Stock Exchange increased by 0.3%. 

In the currency markets, the US Dollar strengthened against most currencies whilst Sterling had a mixed performance. Sterling declined 1.5% against the US Dollar but was flat against the Euro. The Brazilian Real fell by 2.4% against Sterling and the Chinese Renminbi was down by 0.5% but in contrast, the Indian Rupee was stronger by 0.9% and Mexican Peso advanced by 0.8%.

PORTFOLIO

There were two changes to the top thirty holdings. Telelink Business Services re-entered the top thirty and a fairly new holding, Pertamina Geothermal Energy, replaced Conversant and Bolsa de Valores Colombia on relative performance. 

Pertamina Geothermal Energy, which listed on the Indonesian Stock Exchange in February is an Indonesian electricity generator using geothermal steam. Pertamina's share price surged 62.7% during August as the market reacted positively to its second quarter results.

Only four of the top thirty companies saw their stock prices rise in August. Pertamina Geothermal led the risers with its gain of 62.7%. FPT Corporation had another strong month, with its share price rising by 13.8%, Korean Internet Neutral Exchange's share price gained 6.2% on solid Q2 results and TTS Transport Trade Services' share price continued to rise, gaining 4.5% in August.

Twenty-three companies reported declines in stock prices in August and five of these declined by more than 10%, namely China Datang Renewable Power, which declined by 23.0%, Grupo Traxion, down by 13.4% and Brazilian companies, Omega Energia, Electrobras and Santos Port which declined by 13.7%, 11.1% and 10.7% respectively.

Realisations of £12.2m significantly outweighed purchases of £4.6m during August.

DEBT

UEM repaid USD 10.0m on its debt facility during the month. Bank debt therefore decreased from £21.2m to £13.5m and was drawn as GBP 7.5m and EUR 7.0m.

OTHER

UEM's share price ended August at 220.00p, down 4.3% in the month. The discount to NAV narrowed to 13.9% from 14.4%. UEM bought back 1.3m shares at an average price of 220.65p in the month.

A first quarterly interim dividend of 2.15p per ordinary share in respect of the year ending 31 March 2024, was declared in August which will be paid on 22 September 2023 to shareholders on the register on 1 September 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