BARING EMERGING EUROPE PLC: Interim Management Statement
BARING EMERGING EUROPE PLC
Interim Management Statement
Review of the period from 1 April 2013 to 30 June 2013
This Interim Management Statement for the period from 1 April 2013 to 30 June 2013 contains information which covers that period, unless otherwise stated.
The investment objective of the Company is to achieve long-term capital growth, principally through investment in Emerging European securities.
MATERIAL EVENTS OR TRANSACTIONS DURING THE PERIOD
The directors confirm the following material events and transactions which have occurred since 1 April 2013.
During the period from 1 April 2013 to 30 June 2013 the Company bought back 1,363,333 ordinary shares at a cost of £7.1 million. At 30 June 2013 the Company's issued share capital consisted of 20,768,043 ordinary shares (excluding the 3,318,207 ordinary shares held in treasury). During the period from 1 July 2013 to 23 July 2013 a further 30,000 shares have been repurchased for cancellation.
The directors are not aware of any other significant events or transactions up to the date of this report which would have a material impact on the financial position of the Company other than as described in the investment manager's review, which follows.
The share price discount to net asset value at 30 June 2013 was 12.7% (31 March 2013: 10.8%)
Emerging Europe, as with other emerging markets around the world, was hurt by the prospect of higher interest rates and lower commodity prices over the course of the quarter. Although markets in the region fell, the effect of this was mitigated somewhat by successful stock selection, resulting in performance which was more than 3% ahead of the benchmark index over the quarter.
In terms of geographical allocation, the portfolio remains overweight the Russian equity market relative to the benchmark index, supported by attractive valuations. The volatile stock market environment was used to add to technology, internet and media stocks. We participated in the capital increase of VTB, the second largest Russian bank.
The Turkish market was affected by civil unrest and protests against the AK Party government. While the portfolio remained underweight this market, we believe that the current sell off provides some attractive opportunities in selected equities. Over the period, we reduced exposure to Turkish oil refiner Tupras and sold our position in the car importer Dogus Oto, while adding to Turkcell, Turk Tractor and Coca Cola on price weakness.
We remain underweight in Central European markets. In particular, in Poland we took profits in the financial sector over concerns that the Government may nationalise the private sector pension system.
30 June 2013 23 July 2013
Gross Assets £173.2million £179.5million
Net Asset Value Per Ordinary Share 833.76p 865.40p
Share Price 728.00p 757.00p
Discount to Net Asset Value 12.7% 12.5%
CUMULATIVE PERFORMANCE TO 30 JUNE 2013 (Total Return in percentage terms)
Performance Over 3m 1 Year 3 Years
Share Price* -7.4% +12.7% +3.6%
Net asset Value* -5.4% +15.9% +6.1%
Benchmark+ -8.6% +8.7% +10.1%
* Source - AIC using Morningstar
+ Source - Barings. MSCI EM Europe 10/40.
PORTFOLIO INFORMATION AT 30 June 2013
Ten largest holdings: Geographical breakdown:
% of Total Assets %
Lukoil Holdings 10.9% Russia 68.0
Sberbank 10.9% Turkey 15.6
Novatek 5.4% Poland 8.5
Gazprom 5.0% Hungary 2.3
VTB 4.4% Georgia 1.2
Magnit 4.3% Ukraine 1.0
Mobile Telesystems 4.2% Czech Republic 0.5
Turkiye Halk Bankasi 4.0% Slovenia 0.1
PZU 3.2% Cash 2.8
Rosneft 3.2% Total 100.0
24 July 2013
-0- Jul/24/2013 13:36 GMT