Insights

March 2026

ICM Monthly Outlook - March 2026

The escalation of conflict in the Middle East is now the dominant force shaping global markets, with energy supply disruption feeding directly into inflation expectations, bond yields and investor positioning. In this edition, we examine the implications of a sustained oil price shock, the strategic importance of the Strait of Hormuz, and how markets are recalibrating in response. We also outline our current thinking on inflation versus growth, policy constraints, and the conditions required for a stabilisation in risk assets. While uncertainty remains elevated, dislocations of this nature have historically created opportunities over time. Our focus remains on assessing when those opportunities may begin to emerge.

February 2026

ICM Monthly Outlook - February 2026

The early momentum in U.S. equities has paused. Year to date, American indices have drifted sideways while Europe, Asia and emerging markets have outperformed. After several years of U.S. leadership, international diversification is regaining attention. In this month’s review, we examine: the compression in the S&P 500 forward earnings multiple; sector rotation driven by valuation re-pricing; investor reassessment of AI substitution risk, particularly in software and wealth management; relative resilience among AI enablers and infrastructure; gold, treasury yields and U.S. dollar trends; the macro outlook for global growth, inflation and central bank policy; and, contagion concerns in private credit markets While AI continues to present structural growth opportunities, we are now seeing tangible consequences across entire sectors. Valuation dispersion increasingly favours businesses with durable earnings and resilient cash flows. Our broader outlook remains constructive. Global growth is expected to remain steady, inflation continues to trend lower, and policy settings remain broadly supportive.

February 2026

CTP – Best-in-Class Logistics Parks Enabling Nearshoring into CEE

CTP is Europe’s largest listed developer, owner and operator of industrial real estate, with a dominant footprint across Central and Eastern Europe (CEE). Since its founding in the Czech Republic in 1998, the company has built a best-in-class portfolio of logistics and industrial parks that underpin regional supply chains, manufacturing and nearshoring trends. Listed on Euronext Amsterdam in 2021, CTP has grown to 13.8 million square metres of gross lettings area, supported by a substantial landbank that underwrites long-term development and rental income growth. The CEE region continues to benefit from structural tailwinds, including competitive labour costs, EU-backed infrastructure investment, expanding manufacturing capacity and rising domestic consumption. As a leading owner and developer of Class-A, sustainably certified logistics assets, CTP is both an enabler and beneficiary of these trends. This insight explores CTP’s strategic positioning, portfolio quality, landbank optionality and valuation, and outlines why the company remains a high-conviction holding within UEM’s portfolio.

January 2026

ICM Monthly Outlook - January 2026

January 2026 opens against a backdrop of resilient markets, persistent geopolitical noise and powerful structural forces shaping the global economy. Equity markets have extended last year’s momentum, commodities have rallied sharply, and enthusiasm around AI-driven investment and productivity continues to build. While headlines remain dominated by politics, tariffs and fiscal concerns, market behaviour suggests investors are increasingly focused on fundamentals: earnings growth, capital investment and long-term demand trends. This letter from ICM Limited reviews the key market developments so far this year and outlines why, despite familiar risks, the outlook for 2026 appears more constructive than at any point in the past three years.

January 2026

The Philippines – overlooked market, but lots of potential

After a prolonged period of underperformance relative to broader emerging markets, the Philippines has become a smaller and often overlooked component of the MSCI Emerging Markets Index. Valuation levels have adjusted materially, while long-term structural drivers - including favourable demographics, resilient domestic consumption and ongoing infrastructure investment - continue to underpin the economic outlook. During a recent research visit, the UEM team met with portfolio companies and sector participants across ports and water infrastructure to assess operating performance, regulatory developments and capital investment programmes on the ground. This update outlines the key observations from the trip, examines the valuation backdrop, and highlights how selected holdings are positioned within the Philippines’ evolving infrastructure and utilities landscape.

December 2025

ICM Monthly Outlook - December 2025

As we reach the close of 2025, this edition of the ICM Monthly Outlook reflects on a year defined by strong equity market returns, accelerating AI adoption and periodic bouts of volatility that tested investor conviction. From record highs in U.S. equities and a powerful AI-driven rally, to currency shifts, softer oil prices and changing central bank priorities, the past twelve months have reinforced familiar investment lessons while introducing new dynamics that will shape the outlook for 2026. Against this backdrop, ICM reviews the key themes, market developments and policy shifts that influenced performance over the year and outlines the factors underpinning its forward view.

December 2025

Argentina’s Elections: A Vote of Confidence in Milei

Argentina’s 2023 presidential election marked a decisive break from decades of economic instability, chronic fiscal deficits and recurring sovereign crises. After inflation surged above 200%, reserves collapsed and the fiscal deficit widened, voters turned to Javier Milei, a political outsider promising strict fiscal discipline and sweeping liberalisation. His administration moved quickly, implementing deep spending cuts, subsidy reductions and a sharp currency adjustment, while loosening capital controls for the first time in years. These measures delivered rapid stabilisation, including a return to fiscal surplus and a sharp fall in inflation, although the adjustment brought significant short-term economic pain. By 2025, political pressures mounted as recessionary effects and high-profile scandals eroded public confidence, culminating in a setback in the Buenos Aires provincial elections. However, Milei’s strong performance in the October midterms restored momentum, strengthening his congressional position and signalling continued voter support for his reform agenda. With improving macro indicators, renewed political capital and an emerging energy boom centred on Vaca Muerta, Argentina has entered a new phase—creating a landscape that investors, including UEM, are monitoring closely. Find out more in this insight.

November 2025

ICM Monthly Outlook - November 2025

October brought another month of gains for U.S. equities, supported by solid earnings and a widely anticipated rate cut from the Federal Reserve. The tone shifted in early November, with markets giving back some ground as investors reassessed valuations and the policy path. Some recent risks have eased, including a pause in U.S.-China trade tensions and the resolution of the federal shutdown. Others persist. Inflation remains above target, AI-related valuations have been volatile, and limited new data has heightened uncertainty ahead of the Fed’s next meeting. The central view remains that lower yields next year would support equities, credit and Treasuries, but near-term conditions will continue to depend on the flow of economic data and monetary policy signals.

November 2025

Brazil 2026 - Video Overview

In this UEM Insight, Head of Latin America Eduardo Greca outlines why Brazil remains one of our most important long-term investment markets. After a difficult 2024, the Brazilian equity market has recovered strongly in 2025, supported by global capital rotation and attractive valuations, with the Ibovespa up over 30% in sterling terms and UEM’s holdings outperforming. While the economy continues to grow, a policy clash between fiscal expansion and tight monetary policy has kept inflation elevated, interest rates high, and public debt rising. Political momentum is also shifting, with declining approval for the current government and the emergence of pro-market leadership ahead of the 2026 election. For investors, continued domestic equity outflows have created compelling valuations, particularly in infrastructure and utilities—UEM’s core sectors, which benefit from stable regulation and inflation-linked revenues. Looking ahead, expected rate cuts in 2026, strong corporate fundamentals, and favourable entry points position UEM to benefit from Brazil’s evolving economic and political landscape.

October 2025

ICM Monthly Outlook - October 2025

In our latest update from ICM Limited (ICM), they report that financial markets took a brief pause in October following a strong run of record highs in recent months. The S&P 500 and NASDAQ both moved sideways, oil prices softened, and volatility ticked higher amid a series of mixed headlines and a lack of consistent U.S. economic data. Gold, however, continued its ascent, reaching new all-time highs and underscoring investor caution in an environment shaped by shifting interest rate expectations and geopolitical uncertainty. Looking ahead, ICM continues to see underlying resilience in global markets, supported by steady employment data, ongoing U.S. consumer strength, and robust corporate earnings. While isolated corporate defaults and heightened media noise have unsettled sentiment, these factors appear idiosyncratic rather than systemic. With rate cuts expected into year-end, the near-term outlook remains broadly constructive, though volatility is likely to persist as investors balance optimism around AI-driven growth with caution over valuations and policy uncertainty.

October 2025

Brazil 2026: A Defining Moment for Markets

Brazil has long been one of UEM’s largest country exposures — the outcome of a disciplined, bottom-up investment process focused on identifying resilient, well-managed infrastructure and utility companies with clear competitive advantages. After a challenging 2024, 2025 has brought renewed momentum. As global capital has rotated towards emerging markets, Brazil has stood out — the Ibovespa has delivered a year-to-date total return of around 32% in GBP terms, with many quality businesses benefiting from attractive valuations and improving sentiment. Looking ahead, anticipated interest rate cuts and possible political changes in 2026 could act as catalysts for further market normalisation. Against a backdrop of ongoing fiscal challenges and structural reform needs, UEM continues to see long-term value in companies that support Brazil’s infrastructure and economic development.

September 2025

Helios Towers - Empowering Connectivity

Watch here for a recap by our Senior Analyst, Mark Lebbell, as he shares an update on one of UEM's top holdings.

September 2025

ICM Monthly Outlook - September 2025

The latest market insight from ICM Limited reports that U.S. equity indices continue to climb, reaching multiple new all-time highs since July. The S&P 500, which surpassed its previous peak from February 2025, is up 11.95% year to date, while the NASDAQ is up by 14.66%. Key highlights from the report include an update on gold's performance, the treasury bond rally, and the Federal Reserve's influence. As the Federal Reserve shifts towards a more dovish stance, driven by deteriorating employment data, it has set the stage for potential rate cuts. Chairman Powell essentially guaranteed a 25-basis-point rate cut in September, marking a turning point from a restrictive to an accommodative policy. This change is expected to support risk assets and continue the upward trend in equity markets. For a comprehensive analysis of the current market dynamics and future outlook, read the full market review via the link below.

September 2025

Empowering Connectivity: Helios Towers' Path to Sustainable Growth and Value Creation

Our latest investment highlight is focused on Helios Towers Plc, a FTSE 250 digital infrastructure company. Operating across ten countries in Africa and the Middle East, Helios has transitioned from acquisitive to organic growth, delivering positive cash flows and a strong balance sheet. UEM's engagement with Helios began pre-IPO, and we've since built a stake at attractive valuation levels. With a new five-year business plan and shareholder remuneration policy on the horizon, Helios exemplifies UEM's commitment to well-managed, growing infrastructure investments.

August 2025

China: A Mixed Bag

Watch here for a recap by our China Analyst, Gillian Zhao, as she shares insights from her latest visit to China.

August 2025

ICM Monthly Outlook - August 2025

Financial markets experienced a significant upswing in July, driven by robust corporate earnings, particularly from large-cap and tech growth companies. This performance, coupled with increased clarity on fiscal and trade policies, contributed to a surge in investor optimism. The passage of the "One Big Beautiful Bill Act" (OBBB) and a series of trade agreements with Japan and the EU played a pivotal role in reducing political uncertainty and bolstering market confidence. Q2 earnings surprises further reinforced a "Goldilocks" scenario, characterised by solid growth fuelled by stimulus measures and AI innovation, while avoiding runaway inflation. Looking ahead, we anticipate that financial markets will maintain their strength throughout the second half of 2025 and potentially extend this robustness into the first half of 2026, or even longer. While periods of volatility are inevitable, potentially stemming from trade, inflation, or geopolitical concerns, we believe these challenges will be outweighed over time by a recovering business cycle and increasing global liquidity, driven by further monetary policy loosening worldwide.

August 2025

China: A Mixed Bag - On-the-Ground Investor Insights

China's economic landscape in 2025 presents a complex tapestry of opportunities and challenges. Despite facing multiple headwinds, China's GDP grew by a robust 5.3% in the first half of 2025, surpassing the government's 5.0% target. This growth was fuelled by strategic government bond issuances, fiscal measures such as a RMB 300 billion consumption subsidy, and a surge in exports ahead of potential US tariffs. As the Trump administration continues to navigate trade tensions, our recent visits to China offer valuable insights into the current economic conditions and the shifting dynamics of trade and tariffs. The trade landscape is evolving with the US' trade deficit with China reaching US$295 billion in 2024, highlighting the significance of China in global trade. President Trump's reciprocal tariff policies have led to complex negotiations, with recent talks in Geneva easing tensions and resulting in a rollback of tariffs. As China-US relations continue to fluctuate, China is doubling down on building a more self-sufficient economy, rebalancing diplomatic ties, and expanding overseas to hedge geopolitical risks. Find out more in our latest insight.

August 2025

NHPC Limited Overview

Hear from our Analyst, Henry Beck, as he shares an overview of one of UEM's top holdings - NHPC Limited.

July 2025

ICM Monthly Outlook - July 2025

The first half of 2025 presented a tumultuous journey for U.S. equities, with seemingly insurmountable challenges that tested the resilience of the market. From the AI scare caused by DeepSeek, a Chinese artificial intelligence company, which negatively impacted Big Tech valuations, to the rollercoaster of tariff announcements and reversals, and the escalating military tensions in the Middle East, investors faced a gauntlet of uncertainties. Despite these headwinds, the S&P 500 not only weathered the storm but achieved an all-time high of 6,377, illustrating the market's remarkable ability to adapt and thrive amidst chaos. This review delves into the factors that have shaped the market's trajectory, including the impact of President Trump's policies, the devaluation of the U.S. dollar, and the outlook for the remainder of the year, providing a comprehensive analysis of the economic landscape and the challenges that lie ahead.

July 2025

NHPC Limited - Benefitting from India’s Hydropower Focus

A key challenge globally in the transition to net zero has been the intermittency of renewables, necessitating carbon-neutral sources that can compensate for the loss in baseload characteristics from fossil-based power. The situation is no different in India, which must reduce its heavy reliance on fossil-based power if it is to meet its ambitious climate target of net zero by 2070. Fortunately enough, India is endowed with some of the largest mountain ranges in the world, with the Himalayas lining its northern border and the Karakoram mountains to the northwest, representing the hydrological sources to some of the world’s largest rivers. Such topography enables significant hydropower opportunity. The central player of hydropower development in India is state-owned NHPC Limited (NHPC), formally National Hydroelectric Power Corporation, making it the primary avenue to pursue the government’s hydropower ambitions.

July 2025

Piraeus Port Insight - Overview

Watch here for a recap on our insight on Piraeus Port Authority, one of UEM's top thirty holdings.

June 2025

Piraeus Port Authority – A Gateway to Europe

The port of Piraeus has served as the maritime lifeline of Athens for over two millennia, dating back to the city’s Golden Age when Athens was the epicentre of democracy, philosophy, and commerce. Since then, the port has steadily re-established itself as the country’s primary commercial hub and one of Europe’s key maritime gateways. In 2024, the Port of Piraeus was the 5th largest port in Europe by container traffic, handling 4.8 million TEUs (twenty-foot equivalent container boxes) and acts as a vital transhipment port for Asia, primarily Chinese goods, destined for Europe. The Piraeus Port Authority (PPA) company is the concession owner of Piraeus Port with rights to use and develop the port until 2052. Chinese shipping giant, COSCO Shipping, acquired a 51% stake in PPA in 2016 which increased to 67% in 2021 after the shipping company fulfilled its initial investment obligations. The holding is strategic for China as it forms a major piece in China’s Belt and Road initiative. The Greek state owns 7.1% and the free float is 25%. PPA has been listed on the Athens Stock Exchange since 2003.

June 2025

ICM Monthly Outlook - June 2025

May 2025 saw a strong recovery in U.S. equity markets, with the S&P 500 up 6.7% and the Nasdaq soaring 10%, driven by solid earnings and the Magnificent 7. Despite this resilience, year-to-date returns remain negative in Euro, Sterling, and the USD index, as the dollar has depreciated around 9%. Factors such as U.S. policy debates, the proposed tax bill, and concerns over the national debt have impacted the dollar's strength, leading to rising bond yields. Meanwhile, gold and Bitcoin hit new highs, reflecting a shift towards alternative stores of value amid dollar weakness. Markets continue to climb despite ongoing geopolitical and economic challenges, highlighting investor resilience.

May 2025

Is this time different? A pivotal moment for Argentina

When we think of Argentina, the country is not only renowned for its world-class football and tango, but also for the macroeconomic turbulence it has faced over the past decades. In the late 19th and early 20th centuries, Argentina was among the world's wealthiest nations. However, Argentina’s decline began in the mid-20th century, marked by populist economic policies, weakening of institutions, and recurrent crises. Notably, Argentina recorded fiscal deficits in 113 of the past 123 years and has witnessed 9 defaults in its history. While moments of relief, such as the post-2001 debt restructuring and commodity booms, offered temporary respite, they ultimately fell short of resolving the country's deeper structural issues. Argentina is currently undergoing one of the most ambitious economic overhauls in its modern history - read our latest insight to find out more.

May 2025

ICM Monthly Outlook - May 2025

Equity markets have continued their snapback since our last update. The U.S. equity market has recovered all ground since April 2nd, boosted by the capitulation on tariffs, solid earnings in Q1 2025, and better-than-expected jobs numbers. Since their lows on April 8, the S&P 500 has risen 18% and the NASDAQ has increased by 24%. Year to date, U.S. equity markets have returned to positive territory. Our central-case scenario is for the U.S. to avoid a recession this year, despite the dent in confidence suffered by some investors caused by President Trump’s policies. We believe that the extent of the rally in equities and the inconsequential widening of credit spreads suggest that most investors do not expect a recession either. We anticipate that global GDP will kick-on based on fiscal expansion in Europe, the subsidence of tariff risk, a strong pipeline of new orders after the U.S. inveigled trade partners into larger deals than would have been on the table, and a rebound in consumer confidence. We expect to see a plethora of upward revisions to global GDP growth forecasts.

May 2025

Powering the Digital Future: SUNeVision– Hong Kong’s Data Centre Leader

Rising demand for data storage and cloud services is fuelling strong growth in Asia’s data centre market. SUNeVision, Hong Kong’s leading operator, is well positioned to play a key role in supporting the region’s growth in digital interconnectivity, cloud services and AI driven applications. SUNeVision is a high-quality, high-growth digital infrastructure player that aligns well with UEM’s investment strategy. Its resilient business model provides recurring revenue from data centre contracts, as well as offering direct exposure to digital services growth in Hong Kong, the leading data centre hub in Asia. With a dominant position in a growing data centre market as well as improving financials and the prospect of deleveraging its balance sheet, SUNeVision remains a compelling equity investment in the digital infrastructure space for UEM.

April 2025

ICM Monthly Outlook - April 2025

Liberation Day has usurped all that went before it this year. Uncertain U.S. policy around tariffs has whipped up strong economic headwinds globally. Investors, politicians, policymakers, and the general public prefer certainty and will think twice in future dealings with the U.S. Can we ever go back to the way it was? We still believe the bond market will rein in President Trump's domineering behaviour. However, in the meantime, economic growth will slow as countries and companies reconsider their relationship with the U.S. while Trump is President. And one day, President Trump will be replaced. ICM remains committed to our investment process, focusing on facts, ignoring speculation, and taking an investment time horizon that looks beyond the current intraday moves. History doesn’t repeat, but it often rhymes. ICM remains nimble and capable of quickly moving the risk dial as we see events unfold. ICM’s bond funds had their most lucrative periods in the aftermath of crises. ICM’s bond funds have largely derisked to avoid any significant drawdown while we await further developments. ICM is happy to have higher-than-normal cash and short-term investments in highly liquid assets, ready to deploy when we have greater certainty.

April 2025

IndiGrid Overview

Watch here for a recap on our insight on IndiGrid, one of our top holdings in UEM.

April 2025

How Trump’s Tariffs Hit Emerging Economies

Donald Trump, President of the US, unveiled on Wednesday sweeping new tariffs on nearly all US imports. The methodology behind the move - purportedly grounded in “reciprocity” - has mystified economists and rattled global equity markets. The new regime imposes a blanket 10% tariff on nearly all US imports, with steeper rates targeting specific nations: 34% on China, 20% on the EU, and 46% on Vietnam. While Trump aimed at bolstering US domestic manufacturing and correcting trade imbalances, the policy risks undermining both US and global growth in the near term. For emerging markets that are highly exposed to US trade flows, the implications are far-reaching. We should note that the implications are not immediately straightforward amidst other important considerations, such as the exemptions for now on pharmaceuticals and semiconductors, with steel and automotives bundled into their own separate packages, and the uncertain impact on many goods for which the US has non-existent manufacturing capacity where production reshoring would be unlikely.

April 2025

IndiGrid Infrastructure Trust

Today, IndiGrid Infrastructure Trust is India’s largest power sector infrastructure investment trust. IndiGrid’s original and core business is the development and operation of power transmission lines, comprising c.8,700km of transmission lines with c.22,550MVA of transformer capacity. Aside from transmission, IndiGrid made a convincing entry into solar generation in 2023 and more recently venturing into battery energy storage, both of which match the long duration and highly visible cash flow profile of its existing transmission assets. Altogether, IndiGrid now has INR294bn of assets under management, representing an impressive pace of growth from INR38bn at IPO in 2017.

March 2025

Election cycle in South America - Overview

Watch this video of our Head of Latam, Eduardo Greca, as he gives an overview of the opportunities from the election cycle in South America.

March 2025

ICM Monthly Outlook - March 2025

February and March have been tumultuous months. It is all President Trump’s doing, as far as we are concerned. Investors can’t make head nor tail of President Trump's daily decrees, diatribes, and general lack of clarity. Some investors have found the Trump cards too hard to hold. Markets like certainty, but right now, they have none, forcing some investors to turn risk-off until the dust settles. So, the market’s general euphoria for President Trump’s victory has waned. The President’s own euphoria seems to have waned, given that he has admitted that the U.S. consumer must endure some economic discomfort. Our central case remains that President Trump will come to his senses before any significant adverse unintended consequences. Let us not forget that the equity market, the bond market, and big business in the U.S. looms large over President Trump if he gets too wayward with these policies.

March 2025

Election cycle in South America: A potential boost for local markets

The year 2024 was significant for global democracy with over 50 nations holding elections, representing approximately half the world's population. Now, South America stands at a similarly relevant moment with potential political shifts as it approaches the 2025-26 presidential elections. The 2024 political landscape in wealthy nations was marked by voter discontent driven by geopolitical conflicts and economic instability, with leaders constrained by sluggish growth and mounting deficits, requiring unpopular measures like tax hikes and spending cuts. South America's political climate is experiencing significant volatility, with incumbent leftist governments facing widespread decline in support.

March 2025

Sonatel Overview

Hear from our Senior Analyst, Mark Lebbell, as he gives an overview of one of UEM's top holdings - Sonatel.

March 2025

China's National People's Conference

China concluded the yearly Two Sessions during the first week of March, unveiling a series of strategic initiatives aimed at bolstering economic stability, fostering domestic demand and driving technological innovation on the back of AI application. Overall, the outcomes largely aligned with expectations, particularly regarding the fiscal budget for 2025, which was then reflected in the somewhat neutral-to-positive market reactions following the release of the Government Work Report ("GWR"). Find out our key takeaways from the conference in our latest insight.

March 2025

Top Holding Highlight: Sonatel

Rapid digital transformation is being witnessed across sub-Saharan Africa. Sonatel, the leading telecoms operator in Senegal and four other west African markets, a long-term holding of UEM, is a beneficiary of the digital transformation megatrend. Growth in smartphone penetration is driving digital transformation across sub-Saharan Africa. This trend is driven by more affordable 4G enabled phones and network investment by operators, coupled with compelling applications including mobile payment services. Sonatel is currently connecting millions of its customers to the internet for the first time each year, driving new opportunities and efficiencies for its clients in communications, commerce, education and many other areas.

February 2025

ICM Monthly Outlook - February 2025

Financial markets have enjoyed a decent start to 2025. Year to date, in rank order, the Euro Stoxx 50 is up 10.0%, the Dow Jones is up c.4.8%. the S&P 500 is up c.3.2%, and the NASDAQ is up c.1.7%. The oil price is up 2.6% year to date. The gold price has increased 10.2%, in a straight line, whereas US equities have been a roller coaster for investors this year so far. We can confidently say that volatility will likely continue for the foreseeable, given President Trump's predictably unpredictable behaviour. President Trump is doling out populist executive orders faster than Elon can tweet. No day goes by when the world is not left wondering what comes next from the leader of the free world. By way of example, consider the 6th of February; but you can take your pick of any day since the 20th of January. On the morning of the 6th, the US President negotiated a peace deal between, ahem, the PGA Golf Tour and LIV Golf, and in the afternoon, he announced that he would “take over” Gaza. That is one hell of a day’s work by anyone’s standards! I fear complacency for whimsical decisions will have long-lasting consequences.

January 2025

Manila Water - Investee Overview

UEM Analyst Henry Beck created an overview of Manila Water, our latest investment holding highlight.

January 2025

UEM's Top Ten Portfolio Overview

Hear from our Joint Portfolio Manager, Jacqueline Broers, as she shares an overview of UEM's top ten portfolio holdings.

January 2025

ICM Monthly Outlook - January 2025

Happy New Year, everyone. 2024 was another prosperous year for anyone who went long and stayed long risk assets, just like in 2023. The US economy showed remarkable resilience in 2024, confounding the chorus of doomsayers proclaiming an imminent recession for much of the year. In December, the US Federal Reserve Bank cut interest rates as expected. Chairman Powell’s subsequent commentary tempered expectations for more near-term rate cuts, causing the equity markets to slip. US inflation is now dormant, not extinct. The Federal Reserve Bank’s concern for inflation hinges on President Trump’s policies from here. We are buying the dip, as we explain in our latest newsletter.

January 2025

Türkiye: Turning the corner

Watch this video overview of the Turkish Economy under President Erdogan (2023 - 2024) created by our CEE Investment Strategist, George Velikov.

December 2024

Manila Water

The United Nations recognises access to water and sanitation as a human right, culminating as its 6th Sustainable Development Goal of achieving clean water and sanitation for all. For The Philippines, with a population of 116m across a sprawling archipelago of over 7,000 islands, the provision of water and sanitation services is a difficult undertaking, notwithstanding rising challenges from climate change. Following years of underinvestment in the country, areas of water stress and scarcity began to emerge. Necessitating a response to prevent an inevitable crisis, in 2021 the National Economic and Development Authority published the Philippine Water Supply and Sanitation Master Plan, an action plan towards achieving universal access to water and sanitation by 2030. One such beneficiary has been Manila Water, The Philippines’ largest private water company, providing services across the water value chain of water source management, transmission, water treatment, distribution and wastewater treatment to a range of residential, commercial and industrial clients.

December 2024

Türkiye – Turning the corner

It has been 18 months since President Erdogan secured his third consecutive victory in the Turkish presidential election in May 2023, extending his rule into a third decade. Initially, the market reacted negatively, anticipating that the government’s unorthodox monetary policies would perpetuate a hyperinflationary environment. However, these fears proved unfounded as Erdogan promptly shifted direction, appointing Mehmet Simsek as Finance Minister and Hafize Erkan as Central Bank Governor. Read on to find out more about Türkiye's progress.

December 2024

ICM Monthly Outlook - December 2024

Investors will look back on the 2024 US presidential election as a turning point for financial markets. Some sectors of the US financial markets have rallied like billyo since President Trump's re-election. Investors expect pro-growth policies, including tax cuts, deregulation, and increased fiscal spending. Investors have interpreted President Trump's re-election as a green light for risk-on, igniting a rally across equities, credit, and cryptocurrencies. Disinflation was on trend throughout 2024. Economic growth was better than expected. Interest rates did not fall as fast as anticipated and therein lies some potential for US economic expansion to accelerate, in addition to tailwinds from President Trump's policies. We still believe there are plenty of tailwinds to sustain the rally and potentially accelerate US economic expansion. Read on to find out more about what we believe the market implications will be.

December 2024

Sabesp Investment Overview

Watch this video overview outlining how the water and sewerage management company is benefitting Sao Paulo's people, economy and UEM investors.

November 2024

ICM Monthly Outlook - November 2024

The US equity market turned full risk-on as soon as the election result became clear. Initially, we saw a relief rally due to the certainty of the outcome, followed quickly by a rally premised on President Trump’s expansionary economic policies, tax cuts, deregulation, and expected higher GDP growth in the US. The fact that US equity markets snapped higher so suddenly tells us the result was not priced in beforehand. Based on the mountain of published analysis so far, it seems the economy kept top billing. Voters punished the Democrats for the ill effects of inflation on their daily lives over the last four years. President Trump has promised to end inflation. US voters will expect him to deliver, but that might be easier said than done. Read on to find out what we believe the market implications will be.

November 2024

Water for all: How Sabesp’s success benefits São Paulo’s population, economy, government, and investors

As the world rapidly advances with innovations like artificial intelligence reshaping industries and everyday life, it is paradoxical that many regions still lack access to basic services such as water and sanitation. In the developing world, this gap is often due to complex regulatory environments that fail to create the right incentives for investment, political and governance issues, rapid urbanisation and economic constraints. However, we are now witnessing structural changes in some countries, where governments are establishing sound regulatory frameworks that create significant opportunities for private investors. Brazil, with a population exceeding 215 million, faces significant challenges in this sector. Despite some progress, about 16% of the population still lacks access to safe drinking water, and nearly 54% are without sewage services as of 2022. In a sector characterised by high investment needs and opportunities, Sabesp stands out and is currently among the top 10 investments of UEM. Sabesp is one of the largest water and sewage service providers globally, ranking as the second largest sanitation company by revenue and the third largest by population served.

November 2024

TAV Airports

Our team has returned from another insightful investor trip, where they met with up with one of Utilico Emerging Markets Trust Plc’s top 30 holdings - TAV Airports. TAV is a leading airport operator – currently operating 5 airports in Turkey and another 10 airports in Kazakhstan (Almaty), Georgia, Tunisia, North Macedonia, Saudi Arabia, Croatia and Latvia. Through its subsidiary service companies, TAV also provides services in all areas of airport operations such as duty-free, food and beverage, lounge and VIP services, ground handling, technology and security resulting in TAV having a global footprint in 110 airports in 33 countries. Hear from our Deputy Portfolio Manager, Jacqueline Broers, as she covers the key reasons why TAV is a top 30 holding in UEM.

November 2024

The Greek Economy - a quiet boom in the making

In our latest insight focused on the Greek economy, our CEE Investment Strategist George Velikov discusses key market factors and the opportunities there. The Greek economy is currently one of the fastest growing in the Eurozone, experiencing some of its best performance since the crisis years (2009-2018), boosted by increased local consumption, tourism receipts and a surge in investments in both the public and private sector.

November 2024

ICM Monthly Outlook - October 2024

In recent months, we have mentioned reasons to be concerned around global trade, such as the possible introduction of tariffs by the next US President. This month, the European Commission imposed tariffs as high as 45% on electric vehicles from China due to state subvention for these industries. The Chinese Government protested their innocence and threatened to respond with tariffs on agriculture and European automobiles, much to the frustration of some member states who stand far worse from losing competitiveness in such a large market. The US Federal Reserve Bank surprised most investors when it cut rates by 50 basis points in September, with interest rates in the range of 4.75% to 5% now. (Thank God we didn’t spend long debating that event - sarcasm alert for our US readers.). Financial markets rallied hard after the 50 basis point cut. Some interpreted the strong action as an admission of tardiness by the Federal Reserve, suggesting it had fallen behind in executing a soft landing. The better employment data in September lessens the need for further aggressive (50 basis points) cuts. The market expects only two more 25 basis point rate cuts in 2024, whereas we anticipate possibly only one more 25 basis point cut for this year.

November 2024

China and Hong Kong Update

Our Deputy Portfolio Manager Jacqueline Broers reports back on the team's recent trip to mainland China and Hong Kong, where they met with several Hong Kong and Chinese listed utilities and infrastructure companies.

September 2024

ICM MONTHLY OUTLOOK - SEPTEMBER 2024

Uncertainty and volatility go hand in glove. Uncertainty refers to the lack of predictability of information, making investment outcomes harder to forecast. Volatility measures the dispersion of short-term shocks around a long-term mean. Volatility has risen since the start of July due to increased uncertainty. Weak job data in the US and a divergence in central bank policy expectations between the US and Japan brought on August’s volatility. We believe the market volatility since the end of July is mid-cycle skittishness rather than the prelude to a more severe end of cycle sell-off. That said, we are not surprised that volatility has increased given the vulnerabilities festering over the last few months. Now, investors are debating all the interconnected economic factors, overlayed with rising political and geopolitical risks, to determine what will happen next. Investors are less endowed with certainty right now. There is no question that weak economic data spooked the market in early August, but we have no reason to believe this will worsen in the coming months. The latest economic data has been encouraging, with the unemployment data not as bad as feared and consumer confidence higher than expected.

August 2024

A Year of Elections

2024 was always going to be a year of elections with almost half of the world’s population going to the ballot box. One thing that is very clear, is that voters are going to the polls at a time when geopolitical and economic tensions are mounting, making predictability over electoral outcomes much harder. Utilico Emerging Markets’ investment strategy of predominantly investing in infrastructure and utility assets, typically backed by sound underlying long-term concessions or monopolistic positions, means that the portfolio should continue to perform well despite the increased electoral uncertainty.

August 2024

ICM MONTHLY OUTLOOK - AUGUST 2024

For some time now, we have been bullish on the outlook for risk assets, a view that has primarily played out. Firmly held views can often fall victim to confirmation bias, the tendency to interpret new information in such a way as to confirm existing beliefs. We have enough humility to realise that we are not immune. After such a strong rally, now seems like an ideal time to revisit our bullish thesis on risk assets. Despite the clear disinflationary trend, the US Federal Reserve has remained steadfast in its hesitancy to reduce interest rates. They are now running the risk of being too restrictive for too long. Economic growth, like inflation and interest rates, continues to support risk assets. Therefore, in our opinion, we remain in a Goldilocks-like environment due to the twin tailwinds of increasing growth and slowing inflation. While we continue to believe that we are in a Goldilocks period, we recognise that it is maturing and could be in its later stages.

July 2024

INTERVIEW WITH INPOST INTERNATIONAL'S CEO MICHAEL ROUSE

Watch our interview featuring Michael R., InPost International's CEO by our Deputy Portfolio Manager, Jacqueline Broers, where they discuss Inpost's opportunities and why UEM in an investor. InPost is Europe’s biggest operator of automated parcel machines (APMs) and one of the fastest growing e-commerce logistics infrastructure players. Founded in Poland in 2000, InPost went public on Euronext Amsterdam in 2021.

June 2024

POLAND – THE ECONOMIC TIGER OF CEE

Poland is a textbook example of how to escape the middle-income trap. In the last 24 years the Polish economy has grown at an average of 3.6% per annum, nearly twice the pace of global advanced economies over the same period and reached “high-income” classification by the World Bank in 2009 – just 19 years after the fall of communism. It has done so with impressive consistency, registering growth in all but one of those years (2020), and reaching €744bn last year – the 6th largest in the EU. There are many reasons for the country’s success, including its reintegration into the European economic space since 1990 and the successful political reforms of its institutions. This has led to an explosive growth of exports, large amounts of FDI and, critically, Poland has been the largest net recipient of EU funds which has boosted the country’s infrastructure. Since joining the EU in 2004, Poland has received €232bn, while contributing €77bn over the period.

June 2024

ICM MONTHLY OUTLOOK - JUNE 2024

In May, the US economy took two steps forward and one step back from that elusive pivot. Jobless claims and the Institute of Supply Management suggested weakness in the US, but nonfarm payrolls were much stronger than expected. The US 10 year yield was four basis points lower on June 10th than on May 10th. Our outlook synopsis remains that the disinflation trend is still intact, at least for now. We expect core PCE to drop to 2.5% from 2.8% as lower shelter costs and declining wage costs feed into the year-over-year measure. We expect the jobs market to continue to slow and rebalance. The recent JOLTs report points to this loosening in the jobs market. However, getting inflation much lower than 2.5% could be a struggle as the economy and business cycle still looks resilient.

May 2024

WHY EL NIÑO & LA NIÑA ARE IMPORTANT INVESTMENT INDICATORS FOR UEM

In this video, our Latam Investment Strategist Eduardo Greca has outlined the key considerations of El Nino & La Nina impacts for the region, and why these are important investment indicators for UEM

April 2024

WEATHERING THE MARKET: EL NIÑO AND LA NIÑA

El Niño and La Niña are critical climate phenomena that significantly influence global weather patterns, impacting economies and industries worldwide. UEM has over 30% AUM exposure to South America, and as our Latam Investment Strategist, Eduardo Greca, CFA discusses, understanding these climate phenomena is crucial for anticipating the economic implications and how disruptive or beneficial they can be for some companies. Understanding the impacts of these climate phenomena and the potential for share price dislocations they can create opens up opportunities for UEM - find out more in our latest Insight.

April 2024

SERENA ENERGIA OVERVIEW

Our Deputy Portfolio Manager, Jonathan Groocock, shares an insight into one of UEM's top holdings, Serene Energia. Serena operates wind and solar assets mainly in Brazil, and Jonathan covers current projects and future initiatives for this company.

April 2024

INTERNATIONAL CONTAINER TERMINAL SERVICES OVERVIEW

Hear from our Deputy Portfolio Manager, Jacqueline Broers, as she shares an insight into one of UEM's top holdings, International Container Terminal Services Inc (ICT). ICT operates a global port management company headquartered in the Philippines. It acquires, develops, manages and operates small to medium-sized container terminals worldwide with a focus on origin and destination ports.

April 2024

SERENA ENERGIA – BRAZILIAN ENERGY TRANSITION GROWTH ENGINE

Brazil is one of the largest emerging markets economies thanks to its enormous agricultural and mineral resources. But it is often overlooked that it is highly exposed to the Energy Transition Megatrend, being blessed with another extremely valuable resource – renewable energy. One company which has been driving incredible growth in wind and solar assets is Serena Energia, a top 30 investment at Utilico Emerging Markets Trust Plc. Founded in 2008, Serena Energia was established by CEO Antonio Bastos who had a vision of the abundant opportunity for hydro, wind and solar developments in Brazil.

March 2024

KINX VIDEO OVERVIEW

Our Senior Analyst, Mark Lebbell, has provided an insight into one of UEM's top holdings, KINX Inc. KINX operates Korea’s leading internet exchange, as well as number of interconnection data centres.

March 2024

VIETNAM VIDEO OVERVIEW

Jacqueline Broers, our Deputy Portfolio Manager, has shared an update from her trip to Vietnam, where she highlights why the population dynamics should bring investment opportunities across the telecom, utilities and infrastructure sectors.

February 2024

KOREA INTERNET NEUTRAL EXCHANGE INC. – A TRANSFORMATIVE YEAR AHEAD

Korea Internet Neutral Exchange Inc. (“KINX”), a key digital infra holding of Utilico Emerging Markets Trust plc, is a leading provider of neutral internet infrastructure services in South Korea. It operates Korea’s leading internet exchange as well as number of interconnection data centres. It has doubled revenues and net profits since 2018. UEM has been following KINX for over a decade and it has been part of UEM’s portfolio for the last five years. UEM now holds over 5% of the company, which has a market cap of £300m and it is now one of UEM’s top 10 holdings.

February 2024

VIETNAM – THE DARLING OF ASIA?

In 2024, Vietnam is expected to be one of the world’s top 20 highest growing economies with forecasted GDP growth of 5.8%. This surpasses the global average of 2.3% and is higher than regional peers. So, what is driving this growth? Vietnam has strong underlying fundamentals, with solid demographics driving their median to long term GDP growth. As the increase in GDP per capita will drive the prospects of a better quality of life and higher wages, Vietnam is expected to reach higher urbanisation levels for the region by 2030. Increased urbanisation typically results in improved productivity and subsequently improved economies of scale, in turn providing growing investment opportunities within the utility, infrastructure and telecom sectors that support it.

February 2024

EMERGING MARKETS AND THE DECARBONISATION CHALLENGE

Societies have often impacted environments, with adverse consequences for themselves and the rest of nature. Phenomena such as rapid population growth and innovation in the 20th century resulted in increased consumerism, urban sprawl, and globalisation, bringing a first wave of environmentalism. Successful implementation of environmental policy requires an alignment of governments and businesses, as well as broad support from local populations. For individual countries, policy adjustment must balance the pace of transition to net zero with the various levels of economic and social development, whilst factoring in the particular resource base which will be unique to each country and region. What might be appropriate for advanced economies such as the UK, which targets net zero by 2050, may be unachievable for developing nations such as India, which instead is targeting net zero by 2070.

February 2024

ICM MONTHLY OUTLOOK – FEBRUARY 2024

Last month we stated "We are now ready to say that 2024 will be the year that this bull market grows up" when covering the section on market implication in our last edition. Given the rally we have seen in equities already, we have not been disappointed. We remain confident that US financial markets will continue to perform strongly this year, thanks to growing corporate profits, continuing disinflation, and easing monetary conditions in the second half of the year. Equity markets are not priced to reflect any material probability of a recession. Any meaningful economic slowdown would weigh on corporate profits, but we believe the Federal Reserve has the levers to re-stimulate growth if unemployment or deflation become problems.

January 2024

MEGATREND UPDATE: ENERGY TRANSITION

Jonathan Groocock, Deputy Fund Manager, discusses his key findings of Energy Transition Megatrend experienced during 2023 and his outlook for 2024. Jonathan discusses his key findings of the Energy Transition megatrend experienced during 2023, and his outlook for 2024 covers: renewable energy capacity growth; improving competitiveness of solar PV energy; and, further investment in grid infrastructure and energy storage solutions.

January 2024

MEGATREND UPDATE: GLOBAL TRADE

Jacqueline Broers, Deputy Portfolio Manager, provides an update on one of the key megatrends for UEM, Global Trade. In this update, she covers the macro challenges for Global Trade experienced in 2023, how global supply disruptions have been dealt with across emerging markets post the destocking phase following Covid-19, and higher inflation and interest rates leading to slowing global demand for goods. The report highlights two underlying themes for FY24: the continuing shift in global trade towards EM; and, further diversification of supply chains including geopolitical and climate factors.

January 2024

MEGATREND UPDATE: DIGITAL INFRA

Our Senior Analyst Mark Lebbell provides an update on digital infra, one of the key megatrends for UEM. In this video, he describes the global digital infra megatrends across emerging markets including faster, more ubiquitous internet access, further digitalisation of everyday transactions and payments, and more outsourcing of IT infrastructure and functionality to specialists. Mark provides an outlook for 2024, including: current holdings well positioned to capitalise on positive digital infra megatrend, there are increasing expectations for positive financial results and share performance from core holdings, and UEM continues to closely monitor markets for new opportunities in the digital infra space.

January 2024

MIDDLE EAST UPDATE: NAVIGATING REGIONAL RISKS TO FIND ALPHA

As a follow up to the Insight published in December 2023, our Central and Eastern Europe Investment Strategist, George Velikov, has created a video covering the key points.

January 2024

ICM MONTHLY OUTLOOK - JANUARY 2024

Omne trium perfectum. This trio of Latin words, in principle, suggests that all good things come in threes. We believe it is a very apt description of where we find ourselves in the current investment cycle at the beginning of 2024. Even though 2023 was a strong year for returns across many asset classes, we believe 2024 will see a continuation of this strength, and it is more likely than not to last into 2025, making for possibly another two years of strong returns. The premise underlying this constructive view can be distilled down to a simple fact - we are now in a new cycle of easier monetary policy where all good things for risk assets tend to follow. Such a cycle takes time to run its course fully, implying that market conditions will probably be supportive for risk asset markets for all of 2024 and most, if not all, of 2025. According to Alpine Macro research, the average price gain in US stocks in the two years following a bear market is about 60%. So far, the S&P 500 index has risen 32% from its 2022 lows, which supports the view that more price gains can be expected this year.

December 2023

ICM MONTHLY OUTLOOK - DECEMBER 2023

As we draw toward the end of another eventful investing year, evidence suggests that the fog of uncertainty around the course of inflation has finally cleared. Of course, some voices will continue to argue that inflation will remain sticky and that the last mile of disinflation will be the hardest. Yet, regular readers of this letter will know we have never subscribed to this dubious theory. Could we be on the cusp of a new US cycle where we could see a Goldilocks-type economy where conditions are ‘just right’, typically characterised by a combination of low inflation, low unemployment and steady economic growth? Read on to find out more.

December 2023

INPOST S.A. – RESHAPING E-COMMERCE LOGISTICS

InPost is Europe’s biggest operator of automated parcel machines (APMs) and one of the fastest growing e-commerce logistics infrastructure players. Founded in Poland in 2000, InPost went public on Euronext Amsterdam in 2021. The group boasts an impressive network of 21,000 APMs in Poland, 6,000 in the UK, and 6,000 across Western Europe, as well as having an additional 27,000 pick-up-drop-off points. This expansive infrastructure enabled the delivery of 745 million parcels in 2022, a 22.4% increase from the previous year, generating €1.63bn in sales, €440m in EBITDA, and €105m in profit. Find out more about this investment and why it is in our top twenty holdings.

December 2023

INVESTEE INSIGHT: PERTAMINA GEOTHERMAL ENERGY

Our team recently travelled to #Indonesia to visit the Kamojang geothermal facility, which is operated by PT Pertamina Geothermal Energy (PGEO). Hear from our Deputy Portfolio Manager, Jonathan Groocock, as he discusses PGEO's combination of durable zero-carbon generation assets, sustainable cashflows, strong growth prospects and modest valuations, creating a compelling investment for UEM.

December 2023

THE MIDDLE EAST: NAVIGATING REGIONAL RISKS TO FIND ALPHA

The Middle East continues to be a focal point globally as fighting resumes between Israel and Hamas. The conflict between the two sides carries risks of spilling over into a broader regional conflict with even bigger human tragedies and economic disruption. However, excluding the countries of the Levant, the Middle East and North African (MENA) economies are so far unaffected by this conflict and are expected to grow 2% this year and reach 3.4% growth in 2024, backed by powerful structural drivers and global megatrends. In this note we look at some of these trends and the investment opportunity for equity investors.

December 2023

HOLDING HIGHLIGHT: FPT CORPORATION

FPT Corporation is a rapidly growing Vietnamese IT services and telecoms group. With a market capitalisation of US$4.3 billion (31 October 2023), it is already one of the largest private companies in Vietnam. The company, which recently celebrated its 35th anniversary, has a long-term vision of being a major global technology company. UEM first invested in FPT Corp (FPT) in 2019 and it is now one of UEM’s top 10 holdings. We remain excited about FPT’s future growth prospects as it is well positioned to take advantage of a number of digital infra megatrends.

December 2023

ICM MONTHLY OUTLOOK - NOVEMBER 2023

Storm clouds gather, and gentle breezes become gusting winds. Hauling in the sail and setting down anchor is suddenly a tempting option, yet this decision will come at a cost. Greeting loved ones and the enjoyment of home comforts will have to wait. Like sailing a yacht, every investment decision comes with consequences. Deciding not to take a risk can avoid the cost of making a financial loss but will come at the opportunity cost of losing out on a potentially profitable opportunity. The investment manager's skill is to weigh these explicit and implicit risks or costs and decide which option offers the best, probability-weighted, expected outcome. There are no free shots, unlike the usual commentators in the business news media who offer an opinion one week only to offer a very different view the following week, seemingly free of consequences. Beware of any investment advice given without obvious skin in the game. The talking heads would have you believe, this time around, that bonds are crashing as yields surge, equities are overvalued, and economic peril lies ahead. Read on for our view...

December 2023

INVESTEE INSIGHT: SANTOS BRASIL

Our Deputy Portfolio Manager, Jacqueline Broers, provides an update on one of UEM's top 30 investments, Santos Brasil. Santos operates and manages container terminals in ports of Brazil.

December 2023

COUNTRY INSIGHT: CHILE

Latin America is a region well-known for its strong swings in both politics and economic cycles. Amid this backdrop, Chile has differentiated itself, exhibiting more stability and offering investors greater visibility when considering long-term prospects in the country. Unlike many of its neighbours, historically Chile has been known for its political and economic steadiness. With robust institutions and a commendable history of policy continuity, even amidst changes in political leadership, the nation traded at a premium compared to its peers in the region. Further enhancing its investment attractiveness, Chile has signed numerous free trade agreements and double taxation treaties with key markets, actively facilitating international business.

December 2023

ICM MONTHLY OUTLOOK - OCTOBER 2023

JK Galbraith, the famous economist, once said, “The only function of economic forecasting is to make astrology look good”. Indeed, the one certainty about forecasting is that it will give you plenty to be humble about. It is fair to say that the ongoing strength of the US economy since the Federal Reserve embarked on its programme of tighter monetary policy has been underestimated by most market participants. Despite short-term volatility, we remain constructive on developed world equity markets in the medium to longer term. We believe the outlook for equities and other risk assets, in general, is improving. Forward indicators of the business cycle point to an improving economic outlook as we move through 2024 and into 2025, and this should further benefit corporate earnings. Of course, there are plenty of risks in the short term, such as the factors driving the recent spike in bond yields, the threat of a US Government shutdown, or a stronger US dollar. Still, looking further out, we believe we are in the early stages of an equity bull market, which will be supported by an economic environment of rising growth, peak interest rates and falling inflation.

December 2023

GUJARAT STATE PETRONET LIMITED - DEEP VALUE WAITING TO BE UNLOCKED

Gujarat State Petronet Limited is the dominant gas pipeline operator in Gujarat, India, with a 2,700km transmission network as well as a controlling stake in distribution operator Gujarat Gas (GGAS). GGAS has a 36,000km network serving 1.9m households as well as commercial and industrial clients. The transmission grid is critical infrastructure for the State, being the principal connection to Liquefied Natural Gas terminals through which gas is imported into India. The attraction of GSPL’s core business activities is predictable regulated cash flows from transmission operations combined with commercial growth potential from distribution. However, it is evident to us that there is deep value which is being overlooked by the market due to the nature of reporting and the peculiarities of the Indian market.

December 2023

ICM MONTHLY OUTLOOK - SEPTEMBER 2023

After running hot for a couple of years, the US economy continues to decompress slowly like a kettle taken off the boil. While inflation is falling and the job market is declining, it is all happening relatively slowly. Economic momentum is declining, but this weakness does not appear to be accelerating, which is good news if we hope to avoid a meaningful recession. Indeed, this slowing momentum, engineered by tighter Federal Reserve policy, has the economy on a glide path to a soft landing and a targeted inflation rate of around 2%. We believe the probability of the US falling into recession is receding, and even if we have a recession, our view is that it will not be a deep or long-lasting recession. Of course, GDP growth will slow and will be weak for a few more quarters, but it is increasingly likely that GDP growth will post positive rather than negative quarterly numbers over the coming year.

December 2023

ICM MONTHLY OUTLOOK - AUGUST 2023

Imagine driving a car in reverse gear along a mountainous, cliffside road while only looking out the rear-view mirror. Now imagine it’s not the rear-view mirror, but rather a video of the rear-view mirror which is already three months old. It’s a ridiculous scenario, yet this is how Elon Musk colourfully described how the Federal Reserve manages US interest rate policy. While the primary purpose of this hyperbole is presumably to garner a few laughs, it does contain a number of truths which perhaps explains why the Federal Reserve seems so out of touch with the current pulse of the business cycle. Firstly, it is true that the Federal Reserve is focused on backwards-looking rather than forward-looking indicators. Its dual mandate is focused on inflation and jobs data which are lagging indicators. Secondly, when the data used in those indicators arrives, it already tends to be several months old, which again militates against effective decision-making by the Federal Reserve.

December 2023

SOARING DATA USE AND HOW UEM IS POSITIONED TO BENEFIT FROM THIS MEGATREND

UEM invests in companies providing the digital infrastructure which is at the forefront of delivering internet connectivity and digital functionality to consumers, governments and enterprises in emerging markets.

December 2023

TRIP UPDATE: ROMANIA

Hear from our Deputy Portfolio Manager, Jacqueline Broers, as she provides an update from her trip to Romania where she visited the site of Transport Trade Services.

December 2023

GLOBALISATION, GEOPOLITICS, AND EMERGING MARKET INVESTING IN A MULTI-POLAR WORLD

As the geopolitical landscape shifts, so too does the flow of trade and investment. For Emerging Markets investors such as Utilico Emerging Markets, understanding the potential implications of these flows will be crucial for successful long-term investing. The fallout from a multi-polar world is that governments and political blocs must re-evaluate existing relationships, and are pressured to “take sides”. All this has led to a significant change in foreign investment flows and trade policy, and the advent of “nearshoring” and “friendshoring” – manufacturing and sourcing components and raw materials from countries which are in geographic proximity, and allies with shared values.

December 2023

ICM MONTHLY OUTLOOK - JULY 2023

Contrary to consensus market opinion at the time, we stated in our monthly letter last December that we expected 2023 would be a good year for risk assets in general. Clearly, we are pleased with our call given how equity markets have performed in the first six months of the year. We remain constructive on risk assets such as equities and corporate bonds for the remainder of 2023 and especially as we go into 2024, given our view that the global liquidity cycle which has already started to turn. We expect this turn in global liquidity to be further boosted by the Federal Reserve Bank, by mid next year at the latest, however we maintain our view that in the short term to medium term it is better to adopt a more cautious view on US equities and risk assets in general.

December 2023

COUNTRY INSIGHT: CHINA

Having endured some of the harshest lockdowns during the pandemic, China surprisingly pivoted away from its zero covid policy in January 2023. This unleashed enormous pent-up demand, evidenced by an economic rebound earlier this year. However, growth momentum has subsequently softened, prompting concerns about the longevity of China's growth story.

December 2023

ICM MONTHLY OUTLOOK - JUNE 2023

Momentum is a measure of an object's motion and is determined by its mass and velocity. Let’s assume that the US economy is an ocean liner, and that the Federal Reserve’s monetary policy and level of interest rates is the force that is applied to slow or quicken the speed of this enormous ship. Even if the engines of the ocean liner are put into full reverse, its momentum, at first, will still push it forward. Of course, it will begin to slow, but it will take time for the entity to come to a complete standstill and even longer to move into reverse. The US economy works similarly with monetary policy and the level of interest rates as the engines that build or reduce momentum across the economy. This explains why the US economy, and certain components of that economy, such as the jobs market, can seem initially to defy the economic brakes applied by the Federal Reserve. Yet, it is inevitable that if the brakes are left applied, the economy will come to a complete standstill and, indeed, most likely will go into reverse if not lifted.

December 2023

ORIZON – A TRUE EMERGING MARKETS GROWTH STORY

Orizon is Brazil's leader in waste management and operates fifteen sanitary landfill sites. Historically, landfill sites across the globe were relatively simple operations – receiving waste and storing it on site. But in today’s world of strict environmental legislation, these sites are sophisticated “ecopark” complexes which require specialised infrastructure to safely process waste. This includes sorting facilities to remove recyclable materials such as metals, plastics and cardboard; leachate collection and treatment; biogas extraction; and waste-to-energy services.

December 2023

COUNTRY INSIGHT: BRAZIL

With a population of over 214 million people, Brazil is the most populous country in Latin America, providing a large market for goods and services. Combined with abundant resource, a robust financial system, and sound regulatory frameworks, Brazil offers significant investment opportunities. Over the past decade, Brazil has undergone significant economic and political changes. After weathering the Global Financial Crisis in 2008 better than many other countries, Brazil was hailed as a poster child for economic growth and expected to become a rising global power. While the Brazilian market is known for its volatility, there are unique bottom-up investment opportunities that combine growth with resiliency, making them appealing options for investors looking for long-term returns. In this note, we explore three investment stories that demonstrate these characteristics despite the macro and political uncertainties.

December 2023

INVESTEE INSIGHT: ORIZON

Hear from our Deputy Portfolio Manager, Jon Groocock, as he discusses UEM's recent trip to Brazil where he visited the Orizon's Paulinia ecopark, a landfill site. Orizon Valorizacao de Residuos S.A. is one of UEM’s largest holdings.

December 2023

SOUTH KOREA: SHIFTING INVESTOR LANDSCAPE

In January, South Korea’s top financial regulator, the Financial Supervisory Commission (“FSC”), introduced a set of measures to reform the country’s capital markets. The measures are aimed at improving foreign investors’ access to the markets and reforming regulations to be more on a par with other advanced markets. The proposed changes are bold and could trigger a paradigm shift in Korean equities, which have long suffered a valuation discount relative to global peers, by making Korea more conducive to foreign investment.

December 2023

ICM MONTHLY OUTLOOK - APRIL 2023

A tipping point has been reached. Almost a year to the day after the Federal Reserve embarked on a new cycle of higher interest rates and tighter monetary policy, the most aggressive in US economic history, two US regional banks and a Swiss national champion bank have failed. While bond markets are pricing in one final interest hike by the Federal Reserve in May, we believe that the current cycle of interest rate hikes should already be at an end. Tightening cycles typically end with stresses starting to appear in the financial system. The Federal Reserve manages monetary policy in response to the economic indicators of inflation and unemployment, which tend to lag the business cycle, so when stresses appear, it is often a signal that they have gone far enough and, typically, too far already.

December 2023

GOVERNANCE IN EMERGING MARKETS

Corporate structures in emerging markets can be characterised by concentrated ownership that can have a profound effect on the governance risk, through management entrenchment, or the risk of expropriation of minority shareholders. These risks mean that investing in emerging markets can be volatile, highlighting the need for a strong and stable corporate governance structure to guide companies through challenging political and macro environments.

December 2023

ICM MONTHLY OUTLOOK - MARCH 2023

More information does not necessarily equal less uncertainty. February was a classic month where more new economic information only served to create more questions and drive further economic uncertainty. The key question facing markets right now is whether this rise in yields and sell-off in equities, especially growth orientated stocks, is just a one-off adjustment to reflect the fact that markets became too complacent and priced in too much inflation relief too quickly? Or does this reflect a more fundamental hawkish shift in Federal Reserve policy, where it is forced to embark on a renewed campaign of setting more restrictive financial conditions?

December 2023

TURKISH ELECTIONS

Türkiye is currently experiencing one of its most significant humanitarian crises in this century. With over 50,000 casualties and over 26 million people directly affected in the region, the earthquake's immense human tragedy and economic damage have put the timing and outcome of the simultaneous presidential and parliamentary elections currently scheduled for May 14 into question.

November 2023

COUNTRY INSIGHT: MEXICO

Mexico has significant growth potential, primarily driven by secular trends like nearshoring. Over the last 20 years, there has been a strong positive correlation between the GDP growth of Mexico and the United States. Last year, the recovery of the Mexican economy was faster than anticipated, with economists revising growth upwards. To fully unlock its potential, the country needs to renew economic policies that foster private investment.

November 2023

GRUPO AEROPORTUARIO DEL CENTRO NORTE

Grupo Aeroportuario del Centro Norte (“OMA”) is one of the three listed airport operators in Mexico that has a concession to operate, manage and develop thirteen international airports in central and northern Mexico. In 2022, OMA handled 23.2 million passengers, marginally up from its pre-covid-19 levels illustrating how strong passenger recovery has been. Read on to learn how OMA is able to offer not only reasonable growth but also an attractive dividend yield.

November 2023

ICM MONTHLY OUTLOOK - FEBRUARY 2023

More often than not, when a central bank moves to loosen or tighten monetary policy, given that economics is an inexact science, they will typically end up over-tightening or over-loosening and making policy errors. It has been our belief for some time that the Federal Reserve would overtighten during the current cycle, leading to a sharp recession in the US and more significant collateral damage than was probably necessary to get inflation under control. Now we are less sure of a recession being a certainty, not because we think Chairman Powell and his team at the Federal Reserve have judged their tightening exercise to perfection, but more likely because they might have just got lucky.

November 2023

EASTERN EUROPE IN FOCUS

Eastern Europe is the often-overlooked economic success story of the 21st century. The total size of Eastern Europe’s economy is ~$4.3tn, which is comparable to the whole of Middle East, South Asia and Latin America regions. The growth continues to be driven by the expansion of manufacturing and exports, supported by a continuous extension of regional supply chains and “near-shoring” by Western companies. The integration into the EU has been another major driver for the majority of the CEE space, backed by institutional reforms and fiscal support from the EU’s budgetary framework.

November 2023

2023 OUTLOOK

Hear from our Fund Manager Charles Jillings as he discusses his thoughts for 2023

November 2023

ICM MONTHLY OUTLOOK - JANUARY 2023

As we enter 2023, there is probably no more significant determinant on markets and the economic path ahead than that of U.S. inflation and the Federal Reserve’s response to it with a view to bringing inflation back down to its longer-term target of 2%. We have a rather unusual situation where economic data is deteriorating, with U.S. manufacturing on the precipice of a recession, and yet we still have a seemingly very hawkish Federal Reserve. At this point in the business cycle, historically, the Federal Reserve would typically be about to start cutting interest rates if it had not already begun.

November 2023

PORTFOLIO INSIGHT: ELETROBRAS

With a population of over 214 million, Brazil is leading the way with renewable energy accounting for approximately 48% of the country energy matrix. Eletrobras is Latin America's largest utility company with a total installed capacity of 43GW, and it operates 73,800 km of transmission lines representing 40% of Brazil's main electricity grid. A number of initiatives are underway which are expected to enhance the long term value of the company.

November 2023

ICM MONTHLY OUTLOOK - DECEMBER 2022

Just like winter storms, not all recessions are similar. Depending on their particular characteristics, the impact and aftereffects of these storms can be very different. Our regular readers will know that, since early summer, we have been predicting a significant growth slowdown and a recession to hit the US and other major global trading blocs, such as Europe and the UK, in late 2022 and the first half of 2023.

November 2023

TRIP UPDATE: GUJURAT, INDIA

Hear from one of our Deputy Portfolio Managers, Jonathan Groocock, as he provides an update from his latest trip to India.

November 2023

INDIA

Visiting India after a COVID-induced three-year hiatus, it is remarkable to see how much has changed. While the hustle and bustle of over 20 million residents in Mumbai is a familiar sight, the ongoing development is immediately evident. New skyscrapers and apartment blocks, the appearance of two new metro lines inaugurated this year (from just one line previously), and blue hoarding envelops multiple construction sites, all a reflection of continued urbanisation and an insatiable demand for improved infrastructure. But the most significant change of all is the profound sense of optimism and determination of a nation to take its place on the world stage.

November 2023

AN URBANISING WORLD

Emerging markets continue to provide an interesting backdrop for potential investment, as a strong global increase in urbanisation is being driven primarily by the emerging markets of certain Asian countries. As the forces of urbanisation continue to shape markets and societies around the world, it is the investment in infrastructure that will separate regions that are able to channel strong growth into enhanced living standards from those unable to keep up.

November 2023

DIGITAL INFRASTRUCTURE IN EMERGING MARKETS

Digitalisation – in particular, mobile internet usage – is driving large-scale social and economic change in emerging and frontier markets around the world. This burgeoning growth is providing access to information, education and financial services for populations that are often rural or living below the poverty line. Nonetheless, the speed and scale of the digitalisation process differs across regions, and sometimes even within individual nations.

November 2023

ICM MONTHLY OUTLOOK - NOVEMBER 2022

Most of us enjoy a nicely paced movie with a fresh storyline and a few twists and turns to keep us guessing. Observing the Federal Reserve combat inflation with its aggressive interest rate hikes and the resulting economic slowdown emerging over the last several months has been comparable to watching a below-average movie with a relatively predictable plotline and a sloth's pace.

November 2023

ICM MONTHLY OUTLOOK - OCTOBER 2022

Since April of this year, we have been convinced that the global economy has entered a synchronised slowdown and that this will ultimately take the sting out of inflation and pressure off higher prices. Subsequent economic data has only reinforced this view, and it should therefore come as no surprise that we stick by our view and are now even more convinced that our view will prove correct.

November 2023

THE RISING EMERGING MARKET MIDDLE CLASS

In 2018, a key global threshold was crossed: over half of the world’s population was now considered ‘middle class’. It cannot be overstated that the expansion of the global middle class is fundamentally transforming patterns of trade, consumption and investment around the world.

November 2023

ICM MONTHLY OUTLOOK - SEPTEMBER 2022

As an active manager, our overriding goal is to beat the market return. Indeed, the holy grail is to beat the market return but with less price volatility than the market. For some months, we have adopted a non-consensus view. We believe the U.S. and global economy will weaken quickly, vanquishing the Federal Reserve's latitude to hike interest rates aggressively. In our opinion, it is only a matter of a few months before significant economic weakness forces the Federal Reserve to go on hold indefinitely.

November 2023

INPOST

We have seen a number of interesting discussions, impressive management teams and investment opportunities. One company that continues to catch our eye is ...

August 2022

ICM MONTHLY OUTLOOK - AUGUST 2022

As investors, we know uncertainty creates price volatility. When we have more than one possible investment outcome, we get greater price volatility as the market tries to price in the probability of these various outcomes and the implications for markets. One way of dealing with this uncertainty is to adjust your investment timeframe. Generally, if we consider complex questions over a longer timeframe, we can narrow the number of probable outcomes and sometimes almost eliminate the uncertainty.

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