Publication of monthly factsheet

RNS Number : 3952S

Utilico Emerging Markets Trust PLC

13 July 2022

 

13 July 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 June decreased by 5.8%, which was an underperformance compared to the MSCI Emerging Markets total return Index ("MSCI") which decreased by 3.2% in Sterling terms during the period. For the first six months of the calendar year, UEM reported a positive return of 0.9% whilst the MSCI declined by 8.4% in Sterling terms over the same period.

Global equity markets, except for China, weakened considerably in June. Principally this was in response to the Federal Reserve's larger than previously signalled 75bps rate increase, triggered by an 8.6% y-o-y rise in US consumer prices in May. Recessionary fears intensified and commodity prices softened in the second half of the month, which if sustained may give some inflationary relief. The US Dollar continued to strengthen. China's market reacted positively to the easing of some Covid lockdown restrictions although its Zero Covid policy remains very much in place.

The Federal Reserve wasn't the only central bank to raise rates in June. In Brazil, the SELIC rate increased by 50bps to 13.25% with another increase guided for September. The Reserve Bank of India increased rates by 50bps to 4.9% and the Mexican Central Bank raised rates by 75bps to 7.75%. The People's Bank of China pledged to keep monetary policy supportive with a focus on boosting credit availability rather than cutting the one-year loan prime rate from its current 3.7%.

Most markets were weak, with the 6.7% gain in the Shanghai Composite and the 2.1% gain in the Hang Seng Index notable exceptions.  The S&P500 declined by 8.4% in June, the NASDAQ composite declined by 8.7% and the Eurostoxx Index was down by 8.8%. The Kospi in Korea fell by 13.2%, the Brazilian Bovespa Index declined by 11.5%, the Philippines' PSEi declined by 9.9%, the Mexican IPC was down by 8.2%, the Bursa Malaysia weakened by 8.0% and India's SENSEX Index was down by 4.6%. 

Sterling was weaker against many currencies during the month, falling 3.6% against the US Dollar, 1.3% against the Euro and 2.0% against the Indian Rupee. However, the Brazilian Real and Chilean Peso were even weaker, declining in value by 6.0% and 8.8% against Sterling respectively during June.

The Brent Crude oil price gave up some of May's gains, ending June at USD 114.81, a decline of 6.5% for the month. The price of copper declined by 13.5% in June.

PORTFOLIO

There were three changes to the constituents of the top thirty holdings in the portfolio in June. UEM broadly doubled its exposure to Eletrobras in a placing as the Brazilian government reduced its stake in the electricity generation and transmission company to a minority holding during the month. Conversant, an unlisted Singapore based data solutions company and China Everbright Environment Group entered the top thirty on relative performance whilst Korean stocks Naver and KT Corp's reduction in value saw them fall outside of the top thirty. BVC, the Colombian stock exchange also fell outside the top thirty holdings following a drop in both its share price and the Colombian Peso following the election of left-winger Gustavo Petro as president.

Several stocks declined by more than 10%, reflecting increased market perception of risk and in some cases the impact of forced sellers in low volume markets. These included ICT, which declined by 15.2%, Gujarat State Petronet, which declined by 13.5% and a few Brazilian companies including Simpar (down by 22.1%), Orizon (down by 13.7%) and Santos Port (down by 10.9%). In Korea, KINX's share price declined by 12.5% broadly in line with the market decline and CorfiColombiana declined by 19.2% on the election result.

The best performing stock in percentage terms was Eletrobras, which climbed by 12.3%. India Grid Trust rose by 5.1% and China Gas was up by 3.8%.

DEBT

UEM's bank debt reduced by EUR 10.0m as at the end of June to EUR 18.0m (£15.5m). During June, purchases totalled £17.1m and realisations totalled £8.0m.

OTHER

UEM's share price ended June at 207.00p, down 6.3% over the month, adjusted for the 2.00p dividend paid in June. The discount to NAV widened slightly to 13.9% from 13.4%. UEM continued to take advantage of the wide discount in June and bought back 2.6m shares at an average price of 213.82p.

On 28 July 2022, UEM will make a live presentation via the Investor Meet platform. The presentation is open to all existing shareholders and potential investors. Questions can be submitted pre-event via the Investor Meet dashboard and investors can sign up to Investor Meet for free and add to meet UEM via:

https://www.investormeetcompany.com/utilico-emerging-markets-trust-plc/register-investor

Name of contact and telephone number for enquiries:

ICM Investment Management Limited  [phone]

Charles Jillings / Alastair Moreton

Montfort Communications

Gay Collins, Pippa Bailey  [phone]

[e-mail]

 

END

 

 

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