Utilico Emerging Markets Regulatory News (UEM)

13 June 2022

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 in the month of May increased by 0.6%, again ahead of the MSCI Emerging Markets total return Index ("MSCI") which increased by 0.1% in Sterling terms during the period.

Markets in May remained volatile as inflationary pressures weighed on consumers and enterprises globally. Central banks continued to raise rates and to signal further increases. The risk of developed economies slipping into recession has increased. Lockdowns in key Chinese cities continued whilst much of the rest of the World continued to ease restrictions. Markets rallied towards the end of the month on speculation that central banks may not increase rates as fast or as far as expected. Given the current macro headwinds, this optimism may prove to be short lived.

The Federal Reserve raised rates from 0.5% to 1.0% in May and signalled further rises of a similar magnitude would "likely be appropriate at the next couple of meetings". In Brazil, the SELIC rate increased by 100bps to 12.75% although there are signs that the current rate cycle is nearing its peak. The Reserve Bank of India surprised markets with an unexpected 40bps increase to 4.4% in early May and signalled a further rise in June.

Markets remained volatile although the month end rally resulted in many markets posting a positive return for the month. These included the Chilean ISPA Index which gained 12.0%, the Brazilian Bovespa was up by 3.2% and the Shanghai Composite rose by 4.6%. In the US, the S&P500 was marginally up although the NASDAQ Composite declined by 2.2%. Other markets that declined in May included India's SENSEX Index which was down by 2.6%, the Bursa Malaysia declined by 1.9% and Romania's BET Index declined by 1.7%.

Sterling recovered slightly against the US Dollar in May but declined by 1.2% against the Euro. The Brazilian Real gained 4.1% versus Sterling and the Mexican Peso was up by 3.1%. In contrast, the Indian Rupee weakened by 1.9%.

The Brent Crude oil price continued to rise, up 12.3% in May, on the back of ongoing concerns around energy supplies due to the geopolitical issues with Russia, whilst industrial metal prices such as copper fell 2.3% prompted by slower economic growth expectations and the continuing Covid-19 lockdowns in China.

PORTFOLIO

During May, UEM reduced its exposure to companies and markets which were considered more sensitive to current inflationary pressures. Proceeds from these sales totalled £24.1m during the month, whilst £4.0m of purchases were made during May, significantly deleveraging the portfolio.

There was only one change to the constituents of the top thirty holdings in the portfolio in May on relative performance with Bolsa de Valores de Colombia, the Colombian stock exchange replacing Sonatel, which reduced in value after it paid its substantial annual dividend and UEM reduced its position.

Performance of stocks in the top thirty were mixed, with a number of companies paying annual dividends during the month. The best performers in percentage terms were China Gas, which gained 21.4% for the month, albeit recovering from a ten year low in its share price and Rumo which gained 7.8% in May after hosting an investor day, increasing investor confidence in Rumo's outlook.

India Grid Trust's share price fell by 9.9% in response to the increase in Indian interest rates. China Datang Renewables' share price fell by 9.3% on disappointing results due to unfavourable wind conditions. Orizon reversed some of April's strong gains, declining by 8.0% in May.

DEBT

UEM's bank debt remained at EUR 28.0m as at the end of May, with the corresponding liability in Sterling terms increasing marginally from £23.5m to £23.8m. UEM gave notice to repay part of the bank debt although this settled post the month end. 

OTHER

UEM's share price ended May at 223.00p, down 1.1% over the month, with the discount to NAV widening to 13.4% from 11.8%. UEM continued to take advantage of the wide discount in May and bought back 1.6m shares at an average price of 220.39p.

UEM declared a fourth quarterly interim dividend of 2.00p per ordinary share in respect of the year ended 31 March 2022, which will be paid on 24 June 2022 to shareholders on the register on 6 June 2022.

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