The second quarter earnings season was generally supportive of share prices though Brazil again held back Latin America. Europe and the Middle East made gains though Turkey was weaker following a surprise hike in interest rate.
Asian markets were mixed. The performance of the Fund, which was again better than that of emerging markets more generally, was supported by a broad range of holdings. In Poland, share prices bounced back from their June sell-off with insurer PZU up 12% ahead of results that are expected to confirm its profitability and the strength of its balance sheet, supporting the payment of a rising dividend, with its shares already yielding around 7%.Shares in Chinese coal group Shenhua also rose 12% on the month, as its latest monthly production numbers reinforced the ability of the low-cost miner to survive any price war and the threat of low-quality imports. Production rose 4% over the year to June, with sales up 9% over the first half of the year. Qatari telecommunication firm Ooredoo was up 14% ahead of results released at the very end of the month that revealed a 44% rise in net profit over the first half of the year. On the downside, Thai bank Krung Thai fell more than 10% as otherwise very respectable results included a one-off THB 892 million loss from the revaluation of investments that spooked investors. There was one significant addition to the portfolio in July. OMA is a Mexican airports operator with a strong commercial operation through the warehouses, hotels and shops that it runs. Airport passenger numbers, although recovering, have only just returned to their 2007 highs but further growth from here should go straight to the bottom line. This holding was acquired as part of a secondary offer as the controlling shareholder, the construction group ICA, was effectively forced to sell some of its assets to give it the wherewithal to deleverage its over-extended balance sheet, with the OMA share price having fallen by at least 25% in anticipation.
Magna Emerging Markets Dividend
