Mark Lebbell, Senior Analyst for Utilico Emerging Markets Trust, provides an insight on the fund’s performance in August, 2024.

UEM’s NAV total return was marginally up in August. This was a slightly better performance than the MSCI Emerging Markets total return index, which was down by 0.6% in Sterling terms in the month.

August started with a sharp sell-off in many markets, triggered by the first rise in Japanese interest rates for 17 years and fears over the US going into recession. However, the was a strong recovering towards the end of the month with the US the S&P 500 and the NASDAQ composite up 2.4% and 0.6% respectively.

The first, and long awaited, rate cut by the Federal Reserve was widely expected to be announced at its September meeting. This rate cut should be positive for Emerging Markets in general and many EM stocks gained in August in anticipation of this. Markets were up 6.5% in Brazil, 4.2% in the Philippines, 2.6% in Vietnam, and 0.8% in India.

Notwithstanding the above, business and consumer confidence in China remains weak, and the Shanghai Composite Index fell 3.3% during the period, approaching levels not seen since the covid crisis of early 2020. In contrast, Hong Kong's market was up 3.7%.

There were two changes to the top 30 holdings in August, SUNeVision Holdings and ISA, replaced Kaspi and Pertamina Geothermal Energy, primarily due to relative price performance. SUNeVision is Hong Kong's leading data centre operator, whilst ISA, which is headquartered in Colombia, operates electricity transmission assets across Latin America. Strong performers in August included SUNeVision up 22.6% on strong results and a positive outlook.

Ocean Wilsons was also up by 17.5% after the company confirmed it was in talks over a potential sale of its stake in Brazilian port operator Wilson Sons. International Container Terminals was up by 11.9% after it released another strong set of results.

UEM’s share price was unchanged during the month, ending August at 223p per share. During August, UEM announced that a £50m multi-currency facility with Barclays Bank PLC on a secured basis. The initial term is one year and the first drawing on the facility is expected to take place in September. The quarterly dividend of 2.15p per share, ex dividend on 5th of September, will be paid to shareholders on the 27th.

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