Interim Management Statement

RNS Number : 2431I

Templeton Emerging Markets IT PLC

23 July 2012

 

Templeton Emerging Markets Investment Trust PLC ("the Company")

Interim Management Statement

For the three months ended 30 June 2012

This interim management statement relates to the period 1 April 2012 to 30 June 2012 and is the Company's first interim management statement for the financial year ending 31 March 2013, as required by the UK Listing Authority's Disclosure and Transparency Rule 4.3.

OBJECTIVE

The Company's investment objective is to provide long term capital appreciation for its investors through investment in companies operating in emerging markets or whose stocks are listed on the stock markets of such countries.

FINANCIAL POSITION

	As at 30 June 2012 (unaudited)	As at 31 March 2012 (audited)
Total assets (Cum-income)	£1,900.9m	£2,098.6m
Total assets (Ex-income)	£1,886.1m	£2,072.6m
Net asset value (Cum-income)	576.5p	636.3p
Net asset value (Ex-income)	572.0p	628.4p
Share price	533.0p	588.5p
Discount (Cum-income)	7.5%	7.5%
Discount (Ex-income)	6.8%	6.3%

Share price is at the UK market closing mid price.

Net asset value is at closing bid prices. Assets are priced at local close or adjusted for fair value at US market close.

Further information can be found at www.temit.co.uk.

FINANCIAL PERFORMANCE

Performance to 30 June 2012 Share price Net asset value MSCI Emerging Market Index

3 Months % -8.4 -8.5 -7.1

1 Year % -17.2 -16.9 -13.7

3 Years* % +14.1 +14.8 +11.9

5 Years* % +9.0 +7.9 +5.3

10 Years* % +18.4 +17.1 +14.1

Share price Net asset value MSCI Emerging Market Index

Year to 30 June 2012 % -17.2 -16.9 -13.7

Year to 30 June 2011 % +24.1 +25.9 +19.4

Year to 30 June 2010 % +44.5 +44.5 +35.9

Year to 30 June 2009 % -7.4 -8.7 -12.8

Year to 30 June 2008 % +11.8 + 6.1 + 5.8

* Annualised rate of return

All figures in the performance table are calculated in Sterling on a total return basis i.e. with net dividends reinvested

Source: Franklin Templeton Investments / Copyright - © 2012 Morningstar, Inc.  All rights reserved.

           MARKET VOLATILITY AND OUTLOOK

Market Volatility

Emerging markets experienced some volatility in the three months ended June 2012 as continued uncertainty in the Eurozone weighed on market sentiment around the world. Optimism, as a result of the victory of the pro-bailout New Democracy party in Greece, proved to be short-lived as investors shifted their focus towards Spain's banking crisis and reports of weak economic data in the US. The US Federal Reserve disappointed investors with its decision to extend the Maturity Extension Program, more commonly known as Operation Twist, as opposed to implementing a third quantitative easing (QE3) programme. Markets, however, received good news on the last trading day of June with European leaders agreeing to recapitalisestruggling banks directly and to work towards tighter budgetary and political union in the future. Equity prices globally rebounded, leading to a positive return for June; the only month to produce a positive return in the quarter.  Between 31 March and 30 June 2012, the net asset value of the Company decreased by 9.4% to 576.5 pence. Despite the acknowledged economic issues in the developed world and recent market volatility, the Investment Manager (Templeton Asset Management Limited) continues to see emerging markets benefiting from relatively good growth prospects, attractive valuations and solid fundamentals and will continue to invest for the long term.

Outlook

Emerging markets now represent approximately one third of the world's stock market capitalisation. Moreover, emerging market economies are expected to grow at a significantly faster rate than developed economies. Given good growth projections in many emerging countries, reducing dependence on developed markets as intra-regional trade grows, youthful populations and generally better debt-to-GDP ratios than many developed markets, we firmly believe that these markets should do well in the long term. We may see some emerging market companies shopping for assets in Europe at bargain prices and growing their global presence.  The worries and uncertainty are likely to create continued volatility in the global market, which could spill over into emerging markets, but experience has shown that uncertainty often presents opportunities.

MATERIAL EVENTS AND TRANSACTIONS

There are no material events to report from the period 1 April 2012 to the date of this statement.

SHARE BUY BACKS

During the period, the company bought back and cancelled 100,000 shares (which amount to 0.03% of the issued share capital) for a total consideration of £518,500 at a discount of 8.44%.

DIVIDEND

On 18 June 2012 the Company announced a proposed ordinary dividend of 5.75 pence per Ordinary Share which was approved at the AGM held on 20 July 2012 and will be paid on 25 July 2012.

AGM

At the Company's AGM held on 20 July 2012, all the resolutions were passed and details of voting have been posted on the Company's website.

INVESTMENT PORTFOLIO UPDATES AND OTHER COMPANY NEWS

In addition to the Annual Report which was sent to investors in May, the Company has continued its efforts to keep shareholders informed about their investment in TEMIT. 

On a monthly basis, a factsheet and investment commentary are posted to the Company's website - www.temit.co.uk and a link is emailed to all subscribers to the TEMIT email service.

The quarterly manager report for the end of March was issued to the Stock Exchange on 4 May 2012 and, along with the audio reports from the Investment Manager, was updated on the TEMIT website. A link to the report was also sent to those who have subscribed to the Company's email service.

The website is also updated daily with the latest Stock Exchange Announcement, share prices and Company news.

 PORTFOLIO CHANGES

The Investment Manager reports the following principal changes in the portfolio:

Purchases (total value £3.1m)

Impala Platinum Holdings Ltd (Existing holding)

Impala Platinum is one of the leading platinum producers in the world and is responsible for approximately a quarter of global platinum production.

As one of the most efficient and lowest cost producers in the world, it is well positioned to benefit from expected increases in commodity prices over the long term.

Polnord S.A (Existing holding)

Polnord is one of the largest real estate developers active in the residential and commercial segments in Warsaw and other major cities in Poland.

The Company increased its holdings in this company because shares were available at a significant discount to book value.

Arab Potash Company PLC (New purchase)

Arab Potash is a Jordanian potash producer which extracts potash from the mineral rich waters of the Dead Sea using solar ponds. It is the ninth largest producer of potash in the world, the fifth largest exporter and one of only 14 companies which produce potash.

High cash flow generation, a solid balance sheet, world class assets and interesting expansion initiatives make the company an attractive investment. Arab Potash is also a good proxy for the vibrant fertiliser/ agriculture sectors as the world's population, and particularly the relatively affluent middle class, continues to expand.

Sales (total value £7.0m)

Taiwan Semiconductor Manufacturing Co. Ltd (TSMC)

TSMC is one of the world's largest independent integrated circuit (IC) foundries.

The Company divested its holdings in TSMC when the shares successfully reached our analysts' target price.

Geographic Allocation

	% of net assets as at 30 Jun 2012	% of net assets as at 31 Mar 2012
LATIN AMERICA
Brazil	15.2	17.0
Mexico	2.2	2.5
ASIA
Hong Kong/China	25.5	25.8
Thailand	13.8	12.8
Indonesia	10.2	9.2
India	9.9	9.2
South Korea	4.4	4.4
Pakistan	2.1	2.0
Taiwan	0.0	0.3
Middle East
Jordan	0.1	0.0
EUROPE
Turkey	5.8	5.8
Russia	4.5	4.8
Poland	1.4	1.3
Hungary	1.0	1.0
Austria	0.8	0.8
AFRICA
South Africa	2.6	2.6
TEMIT's other current assets	0.5	0.5
	100.0	100.0

Sector Allocation

	% of net assets as at 30 Jun 2012	% of net assets as at 31 Mar 2012
Financials	28.4	27.4
Energy	22.2	23.2
Consumer Discretionary	15.5	16.3
Materials	15.2	15.2
Information Technology	8.4	8.1
Consumer Staples	7.2	6.9
Industrials	2.6	2.4
TEMIT's other current assets	0.5	0.5
	100.0	100.0

Top Ten Holdings

Country	Security	Sector	% of net assets as at  30 Jun 2012	% of net assets as at  31 Mar 2012
Hong Kong / China	Brilliance China Automotive Holdings Ltd.	Consumer Discretionary	8.3	9.1
Brazil	Vale SA, ADR, pfd., A	Materials	4.8	5.0
Indonesia	PT Astra International Tbk	Consumer Discretionary	4.7	4.6
India	Tata Consultancy Services Ltd.	Information Technology	4.6	4.1
Hong Kong / China	Dairy Farm International Holdings Ltd.	Consumer Staples	4.5	3.9
Brazil	Banco Bradesco SA, ADR, pfd	Financials	4.4	4.5
Brazil	Itau Unibanco Holding SA, ADR	Financials	4.0	4.9
Thailand	Siam Commercial Bank Public Co Ltd., fgn.	Financials	4.0	3.5
Turkey	Akbank T.A.S.	Financials	3.7	3.5
Hong Kong / China	PetroChina Co. Ltd	Energy	3.4	3.3

The securities used to calculate the above NAV and industry percentages have been valued on a bid basis. The valuation of the assets is as at each local market close or, where appropriate, adjusted for changes in the fair value of these assets at US close.

This Interim Management Statement has been produced solely to provide additional information to shareholders of the Company to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purposes. In addition, the views, information and data in this publication should not be deemed as a financial promotion or recommendation.

Other than described above, the Board is not aware of any events during the period from 1 April 2012 to the date of this statement which would have had a material impact on the financial position of the Company.

Issued on behalf of the Board
Sara A MacIntosh
for and behalf of Franklin Templeton Investment Management Limited
Secretary

Date: 23 July 2012

End of interim management statement

For further information please contact Client Dealer Services at Franklin Templeton Investment Management Limited on UK freephone 0800 305 306 or [phone] for overseas investors.

 

END

 

 

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