10 May 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 decreased
marginally by 0.1% in April, underperforming the MSCI Emerging
Markets total return Index which was up by 1.4% in Sterling terms
in the month.
Markets in April were mixed with the
US market battling against the stronger than expected March
inflationary data reported and the US Consumer Price Index
increasing by 0.4% pushing annual inflation up to 3.5% compared to
3.2% reported in February. Resilience of the US economy was also
evidenced via stronger reported nonfarm payrolls data as well as
better than expected retail sales, indicating that inflationary
pressures remain and subsequently dampening market expectations of
a cut in interest rates in June to potentially only one or two cuts
later this year. As a result, the S&P Index was down by 4.2% in
April.
The UK and European markets
experienced a different story with lower-than-expected inflationary
numbers reported for March, resulting in the Bank of England and
the European Central Bank expected to now cut rates sooner than the
US Federal Reserve. The FTSE 100 was up by 2.4% for April with the
European markets mimicking the direction of the US and the
Eurostoxx Index was down by 3.2% in the month.
Emerging markets were also mixed.
Turkey was the outperformer for the month with the Borsa Istanbul
(BIST) Index up by 9.9% as core inflationary pressures eased
slightly and the market now expecting headline interest rates
peaking in May at 75%. Argentina also performed strongly this
month, up by 9.1%, with investor sentiment seeing significant
improvement amid structural economic reforms led by Javier Milei,
the recently elected president. For the first time since 2008,
Argentina achieved a quarterly fiscal surplus in 1Q24, exceeding by
a wide margin the targets set by the IMF. The Hong Kong Hang Seng
Index and Chinese Shanghai Index also increased by 7.4% and 2.1%
respectively, helped by the better than expected 1Q24 GDP result of
5.3%, indicating that growth is on track to meet this year's
government target of 5.0%. Chinese GDP growth was boosted by
manufacturing and infrastructure investment, despite the property
sector continuing to be a drag. The Indian Sensex Index continued
on its upward trajectory, up by 1.2% for the month as the country's
general elections started.
The Vietnam Ho Chi Minh Index in
April was disappointingly down by 5.8%, as the expectation of
"higher for longer" US interest rates continues to put pressure on
the Vietnamese currency resulting in the Central Bank increasing
the 14 day reverse repo rate by 25bp. In Brazil, the Brazilian
Bovespa market was down by 1.7%, impacted by the delay in US rate
cuts resulting in a re-pricing of the yield curve but was also
affected by the perceived increase in fiscal risk caused by the
government's decision to revise its 2025-26 fiscal
targets.
In April, Sterling's performance was
also mixed, up 2.6% versus the Brazilian Real, 1.9% against the
Philippine Peso and 1.7% against the Indonesian Rupee but it was
down by 3.4% against the Chilean Peso and 0.9% against the US
Dollar and Hong Kong Dollar.
PORTFOLIO
There were no changes to the
constituents of the top thirty holdings in April. UEM continued to
see a number of its investee companies report strong financial
results in the month.
TAV's share price was up by 23.6%,
benefitting from 1Q24 results being stronger than expected with
revenues up 27.8% and EBITDA increasing 96.8%. Manila Water's share
price was up by 10.7% as the market continues to see strong
momentum following strong results in March. Kunlun Energy's share
price was also up by 16.8% resulting from the positive momentum
witnessed in the Hong Kong market in April. Power Grid of India's
share price was up by 8.8% during the month.
Weaker price performance in April
was seen at Serena Energia, down by 12.6% following the release of
data showing weak wind resources for the month. Serena was also
affected by the higher re-pricing of the Selic rate during the
month which also affected Eletrobras which was down by 10.9%. Nuam
was also down by 9.6% on the back of investors taking some profit
after a strong performance witnessed in March.
The valuation of UEM's unlisted
investment, Petalite, was reduced by £2.1m reflecting continued
declines in the share prices of listed EV charging peers and a
difficult funding environment for early-stage companies. Petalite
is valued at £8.0m as at 30 April 2024, representing 1.5% of UEM's
portfolio.
Portfolio purchases amounted to
£6.4m and realisations totalled £2.1m
DEBT
UEM's debt remained at nil in the
month as UEM repaid all amounts outstanding under the £50m
committed multicurrency revolving facility from The Bank of Nova
Scotia in March. UEM is currently in discussions regarding a
replacement revolving facility and a further announcement will be
made in due course.
OTHER
UEM's share price ended April at
226.00p, increasing by 2.3% over the month with the discount
narrowing to 17.5% from 19.3%. UEM bought back 0.6m shares at an
average price of 222.77p in the month.
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