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JPMorgan’s Global Emerging Markets Income Trust results show the region in rude health

David Stevenson, 18/10/2019


JP Morgan released its year end results for its Global Emerging Markets Income Trust today and it will please both investors in the closed-ended fund itself and perhaps other investors in the regions.

Net revenue was up by £0.5 million to £17.6 million and when calculated per share amounted to an increase of 0.14p to 5.92p.

The trust increased its dividend payout by 2 percent on a year-on-year basis, bringing the total dividend to 5.1p per share. On today’s share price that is equivalent to a 3.9 percent dividend yield.

During much of the year, the trust traded on a premium to NAV and interestingly the company did not engage in any share buy-backs, a sure fire way of closing a discount and pushing into a premium.

Furthermore, the company actually issued 450,000 new shares. The company stated: “the impact of the share issuances on the NAV was immaterial.”

In terms of where the performance is coming from, China remains the trust’s main country allocation. Companies in this region that aided the trust’s performance include electrical appliance manufacturer Midea, dairy products producer Inner Mongolia Yili and life insurance companies such as China Pacific Insurance. The latter being an example of the growth in financial intermediaries and a sign of a growing middle class in China.

From a macro perspective, the trust acknowledged that equity markets had been volatile due in no small part to the trade tariff disputes between the US and China. In fact, the company stated: “this damaging dispute appeared no closer to resolution than it had been a year earlier.”

However, emerging market equities made progress in the second half of the year ending 31 July as market sentiment improved. The company attributes this to more dovish stance adopted by the US Federal Reserve regarding monetary policy which caused other central banks across the world to follow suit.

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