12 February
2025
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 up in
January by 3.0%, outperforming the MSCI Emerging Markets total
return Index which was up by 2.3% in Sterling terms during the
month.
Donald Trump was inaugurated as
President of the United States and as in prior months, speculation
about his administration's policies dominated investor sentiment
globally. The level of uncertainty, especially with regards to
import tariffs, trade and foreign policy remained high. The release
of DeepSeek, a rival to ChatGPT, developed by a Chinese company
reportedly using lower computing power intrigued the market, posing
questions about America's lead in AI technology and future demand
for the latest Nvidia processing chips.
Generally, developed markets were
positive during January. The S&P 500 Index advanced by 2.7% in
the month. Europe's markets were strong, with the FTSE 100
advancing by 6.1%, the Eurostoxx Index was up by 8.0% and the DAX
Index in Germany was up by 9.2%. Europe's performance seemed to be
driven by investors rebalancing portfolios due to the low relative
valuation of European versus US equities rather than any clear
geopolitical or economic catalyst. The US Federal Reserve held
rates as expected at its January meeting, whilst the European
Central Bank and Bank of England had their first meetings of the
year scheduled for early February, with rate cuts by both
institutions expected.
In the emerging markets, the wait
continues for tangible signs of China's stimulus measures, with
policy makers perhaps waiting for Trump to take office and to see
Chinese New Year consumer spending patterns before making
decisions. The Shanghai Composite Index declined by 3.0% whilst the
Hang Seng Index was up by 0.8%. In India, markets were subdued
ahead of the Union Budget announcement on 1 February 2025, with the
Sensex Index declining by 0.8% in January.
In January, there was a recovery in
the stock market in Brazil with the Bovespa Index up by 4.9% and
the Brazilian Real appreciated by 6.6% versus Sterling. The
Selic rate was raised by 100bps during the month to 13.25%.
Elsewhere in Latin America, the threat of tariffs on Mexican goods
was a clear overhang but despite this the IPC Index did gain 3.4%
in the month and the Mexican Peso firmed by 1.5% against Sterling.
Threats of tariffs on Colombian imports into the US were quickly
withdrawn and the MSCI Colcap Index was up by 10.3% in January also
benefiting from election speculation. Another strong market
performer was Poland, where the MSCI Poland Index gained 11.5% in
the month.
There was a sharp fall in the
Philippines market at the end of January, when most of the rest of
the region was closed for the Chinese New Year holidays, in
response to lower than expected GDP growth, concerns over higher US
interest rates and food inflation. The PSEI index declined 10.2% in
January. There was also weakness seen in Thailand, with the
SET Index down 6.1% and the Bursa Malaysia Index fell by
5.2%.
PORTFOLIO
There were three changes to the top
thirty holdings in January. Interconexion Electrica (ISA),
Corficolombiana and Anhui Expressway replaced China Gas, Medikaloka
Hermina and Power Grid Infrastructure due to relative performance
in the month.
ISA is a leading electricity
transmission company based in Colombia, with assets across South
America. Corficolombiana is one of the largest infrastructure
companies in Colombia, with operations predominately in midstream
and downstream gas segments and toll roads. Anhui Expressway is a Chinese toll road operator.
The year started with a risk on
sentiment in Latin America, driven by attractive valuations, less
crowded trades, and early signs of a more pro-market political
cycle. This led to significant gains in both equities and
currencies across the region's major economies. In January, UEM's
largest Brazilian holdings, Alupar, Orizon and Sabesp, all rose by
7.3%, 9.6% and 6.9%, respectively. Serena Energia's share price
rose by 18.0%. Colombia also performed well, with Corficolombiana
increasing 18.3% and ISA's share price up by 10.7%.
Another notable riser was Telelink
Business Services, with a 13.5% gain in its share price, albeit on
relatively low volumes. Umeme was up 6.4% in the month.
Asian holdings were generally
weaker. International Container Terminal's fall of 9.1% in the
month reflected the sentiment in the wider Philippines' market,
although Manila Water's share price was more resilient and gained
0.7% for January.
Chinese holdings were also volatile
ahead of the Chinese New Year holiday. Kunlun Energy reversed most
of December's strong gains, falling by 11.3% in January. Sunevision
declined by 12.0% and Citic Telecom was down by 5.0% during the
month.
Portfolio purchases amounted to
£4.3m and total realisations were £8.7m.
DEBT
UEM's debt at the end of January
remained drawn in US Dollars (USD 15.0m) and Euros (EUR 15.0m)
although the balance in Sterling terms increased 0.8% to £24.6m
reflecting exchange rate movements.
OTHER
UEM's share price was unchanged for
the month, ending January at 213.00p. The discount to NAV increased
to 19.8% from 17.4%.
UEM bought back 302,454 shares at an
average price of 214.33p in the month, taking the total shares
bought back in the ten months to 31 January 2025 to 4.1m shares,
equivalent to 2.2% of the share capital as at 31 March
2024.
Name of contact and telephone number for
enquiries:
ICM Investment Management
Limited
+44(0)1372 271486
Charles Jillings, Jacqueline Broers,
Alastair Moreton
Montfort Communications
Gay Collins, Nita
Shah
+44(0)20 3770 7913
utilico@montfort.london
