11 October
2024
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 was
marginally down in September by 0.1%, weaker than the performance
of the MSCI Emerging Markets total return Index which was up by
4.4% in Sterling terms in the month.
Global markets in September ended
the month on the whole in positive territory. The US market (the
S&P Index) ended the month up by 2.0%, despite witnessing a
slow start on the back of softer macro data. Retail sales and new
home sales weakened, nonfarm payrolls rose less than expected and
private consumption expenditure growth was revised lower. The
market however was driven by the long anticipated start of the US
Federal Reserve rate cutting cycle. The outsized interest rate cut
of 50bps, the first rate cut since 2020 bringing rates to
4.75-5.0%, helped to push the US market higher. The European
central bank also lowered its interest rate by 25bps as the
European economic outlook deteriorated whilst the Bank of England
held rates.
The Chinese market started the month
sluggishly as retail sales and industrial production all continued
to slow. However, on 24 September the Chinese central bank, the
PBoC, announced a number of measures to revive growth. These
included lowering the seven day reverse repo rate and lowering
mortgage rates as part of its stimulus measures. The epic
stimulus package helped to boost the markets with the Hang Seng and
Shanghai Composite Index both recovering at the end of the month,
up by 17.5% and 17.4% respectively.
The easing of the US and Chinese
monetary policy helped many emerging markets deliver solid market
performances during the month. The Philippines PSEi Index was up by
5.4%, benefitting from the Philippines central bank cutting
interest rates as inflationary pressures continue to trend
downwards, whilst the Thailand Set Index was up by 6.6%. The Indian
Sensex Index was up by 2.3% as macro conditions remain
favourable.
Brazil was one of the outliers for
the month with the Bovespa Index down by 3.1%. The Brazilian
central bank bucked the trend witnessed in most countries and
raised interest rates. The Selic rate increased in September by
25bps, the first time in over two years, to 10.75% with the central
bank indicating that there are more increases ahead as they tackle
a challenging inflationary outlook driven by stronger than expected
economic activity. Further, the Brazilian market was not helped by
concerns around the government loosening fiscal discipline. The
Turkish market, the Borsa Istanbul Index, was also down by 1.7% as
inflation continues to run higher than expected complicating the
outlook for monetary policy decisions.
PORTFOLIO
There was one change to the top
thirty holdings in September, Vietnam Holding Ltd ("VNH") replaced
China Datang due to share price performance of VNH as well as a
reduction of position in China Datang.
VNH is a closed-end fund that
invests in high-growth companies in Vietnam, focusing on domestic
consumption, industrialisation and urbanisation. During the month,
its share price was up by 7.0%.
The portfolio had mixed performances
in September. Strong performers included three Chinese companies,
Shanghai International Airport, Sunevision and China Gas, up by
16.0%, 13.1% and 9.4% respectively benefitting from the recently
announced Chinese stimulus policies. Santos Brasil, also saw its
share price increase by 13.8% as it was announced that CMA CGM will
acquire a 48% stake in the Brazilian port operator and launch a
public offer for the remaining shares.
Share price weakness during the
month was seen within some of the Brazilian holdings, affected by
the local domestic negative investor sentiment and higher interest
rates expectation. JSL was subsequently down by 11.0%, Rumo was
also down by 8.5% and Eletrobras down by 5.3%.
Portfolio purchases amounted to
£12.8m and total realisations were £10.1m.
DEBT
During the month UEM drew upon its
£50m multi-currency facility with Barclays Bank. UEM's debt at the
end of September increased from nil to £19.5m and was drawn in US
Dollars (USD 15.0m) and Euros (EUR 10.0m).
OTHER
UEM's share price decreased in the
month by 2.7%, ending September at 217.00p. The discount to NAV
widened to 18.4% from 16.9%. UEM bought back 0.3m shares at an
average price of 217.27p in the month, taking the total shares
bought back in the six months to 30 September 2024 to 2.9m,
equivalent to 1.5% of the share capital as at 31 March
2024.
The first quarterly interim dividend
of 2.15p per ordinary share in respect of the year ending 31 March
2025, was paid on 27 September 2024 to shareholders on the register
on 6 September 2024.
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