Barings Emerging EMEA Opportunities outperforms benchmark during recovery year – Barings Emerging EMEA Opportunities (BEMO) has published its full year results for the 12 months to 30 September 2021. During the period, the NAV total return was up 36.6% while its share price increased by 35.1%, compared to the benchmark return of +33.3%.
The discount at year-end was 13.9% compared with 15.5% for the end of the prior year while the average discount during the year was 13.1%. During the year, 231,245 Ordinary Shares were bought back and cancelled at an average price of £7.41 per Ordinary Share, for a total cost of £1,715,000. The share buybacks added approximately 2.1 pence per Ordinary Share to NAV, accounting for just under 0.2% of the total return to shareholders.
In respect of the six-month period ended 31 March 2021, BEMO paid an interim dividend of 15 pence per share. For the year under review, the board recommends a final dividend of 11 pence per share, which amounts to a total dividend for the year of 26 pence per share equivalent to a yield of around 3.3% on the year end share price of 793p.
Statement from the chair:
Since the year-end, equity markets have continued to extend their recovery from the lows of 2020, reflecting optimism that the global economic recovery will continue. After this strong rebound in economic activity, worries now centre around inflationary pressures caused by the release of pent-up of demand and the consequential disruption to global supply lines. In turn, this has led to concerns that the stimulatory monetary policies followed by central banks around the world might be reversed with adverse effects on equity markets.
Despite these global concerns, there are reasons to be optimistic for the emerging EMEA asset class. We have continued to see a recovery in earnings growth across many of the companies in our investment universe. This trend bodes well for the performance of the portfolio and the income generated by the companies in the portfolio. Underpinning this earnings growth is the strength of the consumer. High disposable income growth across most parts of the region, combined with ongoing efficiency gains, will remain a key driver of earnings over the medium term. The case for investment in the region’s equities also comprises a degree of resilience against inflationary pressures. This has been most evident in recent months, where rising energy prices have helped support economic activity and stock market performance across some of region’s markets. This will continue to be important over the coming months as inflationary pressures persist.
Liquidity across the region is improving, underpinned by the increased participation of retail investors. We believe this trend is set to continue, and will help to support portfolio diversification and valuations.
Finally, against a backdrop of monetary tightening, the region will continue to benefit from the flexibility provided by the independent monetary policy framework that has been established in most of the countries (one obvious current exception being Turkey).
The impact of some of these positive trends can be seen in the performance of markets across the region. For example, in U.S. Dollar terms, both Russia and Saudi Arabia are at multi-year highs.
These factors should help contribute to the increasing attractiveness of emerging EMEA equities as an asset class, whilst the Company’s diversified portfolio is well placed to continue to deliver attractive returns for our Shareholders.
BEMO : Barings Emerging EMEA Opportunities outperforms benchmark during recovery year