10 January 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

In December, UEM's NAV total return increased by 5.4% outperforming the MSCI Emerging Market total return Index which was up by 2.7% in Sterling terms during the month. For the year to 31 December 2023, UEM's NAV total return increased by 15.1%, significantly outperforming the MSCI Emerging Markets total return Index which was up 4.1% in Sterling terms over the same period.

Global equity markets in December continued to be strong, as expectations that the US Federal Reserve will cut interest rates in 2024 were confirmed, with the Federal Open Market Committee indicating that there could be three rates cuts in 2024 and Colin Powell, Chairman of the Federal Reserve openly echoing this view. Subsequently, the S&P Index was up by 4.4%, and the DXY Dollar Index fell.

This more aggressive policy pivot by the Federal Reserve fuelled a more positive outlook for emerging markets. Within Latam, the Brazilian Bovespa Index was up by 5.4% for the month of December, the Mexican Bolsa Index was up by 6.2% and the Chilean IPSA Index was up by 6.5%, despite the second constitutional proposal being rejected again in a national plebiscite, leaving the current constitution in place. Argentina was the outperformer in the region for the month of December, with the Merval Index up by 14.3%, as the new President, Javier Milei, implemented a massive deregulation package to enhance the competitiveness of Argentina which so far has witnessed fewer protests than expected.

Asia followed suit with India's Sensex Index up by 7.8%, hitting an all-time high during the month of December, with the reported S&P Purchasing Managers' Index ("PMI") data being expansionary for a twenty ninth month in a row at 56.0 in November, albeit at a slightly slower pace compared to the prior month. The Vietnam Ho Chi Minh Index was up by 3.3%, the Philippines PSEi Index was up by 3.6% and the Thai Set Index was up by 2.6%. The outliers for the month were Hong Kong's Hang Seng Index which was flat and the Chinese Shanghai Composite Index was down 1.8%. PMI data reported from China was mixed with manufacturing PMI data being in contractionary territory whilst services being expansionary. Beijing, however, continues to announce further industrial policies in an attempt to boost domestic demand.

In the currency markets, Sterling's performance in December was mixed, up 0.7% against the US Dollar, but down 0.5% against the Euro. It was also up 1.3% against the Chilean Peso and up 126.3% against the Argentine Peso as the new government devalued the currency as part of its shock therapy aiming to fix the economy.

PORTFOLIO

There were two changes to the top thirty holdings, with Grupo Traxion ("Traxion"), the Mexican transportation and logistics operator, re-entering the top thirty, replacing CTP and Vamos Locacao de Caminhoes Maquinas e Equipamentos ("Vamos") also re-entering the top thirty, replacing Telelink Business Services. Both companies re-entered the top thirty based on strong share price performance, up by 16.0% and 8.8% respectively.

Once again, December saw many companies in the portfolio witnessing strong share price performances, with twenty-seven companies in the top thirty seeing a positive increase, benefitting from the strong tailwinds of the broader markets. Kinx, the Korean data centre provider witnessed a 19.6% increase whilst Inpost's share price was up by 15.5% boosted by the news that PPF Group acquired a 5% stake from Advent International ("Advent"), taking its holding to just under 22% and has an option with Advent to acquire a further 10%. Power Grid Corporation of India was up by 13.2% helped by the strong Indian market but also helped by winning some transmission line and substation assets under the tariff-based competitive bidding process.

Petalite's valuation was reduced by 20.2% reflecting continued declines in listed EV peer share prices and the challenging market environment for capital raises of early-stage companies.

At the end of December, UEM's unlisted Hong Kong subsidiary received a capital distribution from CGN Capital Partners Infra Fund 3, representing partial payment of the exit proceeds. In early January this was converted to USD 6.3m and has been paid to UEM from UEM (HK) reducing UEM's unlisted exposure by 0.9%. As at 31 December 2023, the unlisted holdings adjusted for this return equated to 6.2% of UEM's portfolio.

Portfolio purchases amounted to £8.9m and realisations totalled £11.8m in the month under review.

DEBT

UEM's debt increased from £25.6m to £30.0m during the month, drawn as EUR 26.0m and GBP 7.5m.

OTHER

UEM's share price ended December at 229.00p, up 4.1% over the month. The discount to NAV widened to 14.7% from 13.6%. UEM bought back 1.2m shares at an average price of 222.80p in the month. This takes the total shares bought back in the nine months to 31 December 2023 to 7.8m, equivalent to 3.9% of the share capital as at 31 March 2023. 

The second quarterly interim dividend of 2.15p per ordinary share in respect of the year ending 31 March 2024, was paid on 15 December 2023 to shareholders on the register on 1 December 2023.

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