Baring Emerging Europe Plc...Baring Emerging Europe Plc Performance comparator* Relative Quartile**...

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Baring Emerging Europe Plc January 2020 Matthias Siller, CFA Maria Szczesna, CFA Adnan El-Araby, CFA

Transcript of Baring Emerging Europe Plc...Baring Emerging Europe Plc Performance comparator* Relative Quartile**...

Baring Emerging Europe Plc

January 2020

Matthias Siller, CFA

Maria Szczesna, CFA

Adnan El-Araby, CFA

For investment professionals only 2

Historic performance

Performance as at 30 September 2019 (Gross)

Source: Barings as of 30 September 2019. Returns are gross of fees in GBP.

*MSCI EM Europe Net 1040 from 01-May-08 (previously FTSE Eastern Europe)

**Quartile ranking is based on Morningstar Category - Emerging Europe Equity, customised to include BEE Plc, returns in GBP. Morningstar fractional weighting methodology

applied.

Past performance is no indication of current or future performance

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Baring Emerging Europe Plc Performance comparator* Relative

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Portfolio’s Carbon Footprint

As we continue to work the changing needs of our shareholders, we are able to show the carbon

footprint of BEE Plc.

In what remains a carbon intensive region of the world, we are pleased to show that our portfolio has

a lower carbon profile than that of the benchmark.

• Barings feel this is a reflection of opportunities found in Financials, Consumer and Technology orientated

businesses and away from traditionally carbon intensive sectors such as Energy, Materials and Utilities.

Within Energy however we do take note of positive developments:• While some may object to investing in fossil fuels, natural gas remains as an important fuel that is much

cleaner than coal, important in the context of Russia’s ambitions of growing to be the dominant global

player in Liquefied Natural Gas (LNG), a cleaner energy source.

• With about 38% of energy production still reliant on the much dirtier coal, countries switching to natural gas

can make a real contribution to reducing emissions.

• We think that those investors who value ESG highly but believe the challenge is to reduce carbon

emissions over time rather than divest immediately, could find this approach appealing.

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Portfolio’s Carbon Footprint

Source: Barings, Carbon emissions data (Scope 1 and 2) are sourced using Barings methodology.

*To make an accurate comparison we have scaled the size of the benchmark to the portfolio NAV.

Carbon Tonnage for Portfolio Carbon Tonnage for Benchmark*

Portfolio Benchmark Carbon Scope 1 Carbon Scope 2 Carbon Scope 12 Carbon Scope 1 Carbon Scope 2 Carbon Scope 12

BEE Plc. MSCI EM Europe 10-40 54,687 6,039 60,726 109,546 7,614 117,160

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Portfolio Liquidity

Source: Barings, 25 October 2019

79.3%

14.8%

1.9%

1.7% 2.5%

Liquidation Time of Portfolio (% Weight)

<1 Day 1-3 Days 3-5 Days 5-10 Days 10+ Days

We continue to monitor the portfolio’s liquidity to ensure the fund is not exposed to excessive

liquidity risk

79% of portfolio can be liquidated within 1 day

94% within 3 days

96% within 5 days

2.5% is less liquid: assets that cannot be sold at fair value in under 10 days

Emerging Europe / BEE plc: Stock market performance

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Baring Emerging Europe plc NAV per share and NAV volatility

NAV per share (net dividend re-invested) at all time highs - volatility stays low

Source: Bloomberg, as at 15 January, 2020

BEE plc NAV performance (GBp)

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BEE plc NAV per share BEE plc NAV per share (dividend re-invested)

GBp 296.5

Investment Case:Profitability, Earnings and Dividend Growth & Valuation

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Expect stronger earnings performance in the 2020’s

Emerging Europe: earnings growth - equity index earnings

Source: Bloomberg, as at 31 December, 2019

EPS – Earnings Per Share; CECE – Central European Equity Index

Dividend payments in % of 2011 dividend payments (USD)Index earnings as % of Full Year 2011 earnings (USD)

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Turkey dividend payments in USD ( 2011 = 100%) MSCI Global Emerging Market DPS generation USD (2011 = 100%)

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RTSI$ Index MXEF Index WIG20 Index XU100 Index JALSH Index

Emerging Europe: stock market valuation

Source: Bloomberg, as at 31 December 2019: RTSI – Russia, WIG20 – Poland, MXEF – MSCI Emerging Markets, XU030 – Turkey, JALSH Index – South Africa

PE ratios

Emerging European Equity markets amongst the cheapest globally

Emerging Europe: macroeconomic backdrop

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Emerging Europe: macroeconomic forecasts

Russian economic growth accelerating somewhat, Central Europe slowing from overheated levels

Source: Bloomberg, as at 25 October, 2019

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Emerging Europe: New car sales

Source: Bloomberg, as at 15 January, 2020

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Potential for uncorrelated growth

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Central Europe / Russia: Rising House prices

Budapest house prices red-hot / Moscow real estate recovery

Source: Bloomberg, as at 30 October, 2019

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Romania house price index Austria house price index Czech Republic house price index

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Emerging Europe: The New EU Member States –ready for the next decade

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Central Europe: Global trade worries affecting industrial production?

Central Europe will continue to benefit from EU subsidies and enjoy solid household consumption growth

Source: IIF, as at 4 December, 2019

PL – Poland, LT – Lithuania, HU – Hungary, LV – Latvia, SK – Slovakia, EE – Estonia, BG – Bulgaria, CZ – Czech Republic, RO – Romania,

SI – Slovenia, HR – Croatia

EU cohesion funds contribution to GDP growth (%)

2007 -2018New EU member states: GDP per capita (% EU average)

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Central Europe: Successful investment for the future

Foreign direct investment has delivered a world class industrial infrastructure

Source: wiiw, as at December 2019

*Dark-shaded bars (front): 2002-2005; light-shaded bars (back): 2014-2017. Dots refer to the average robot density growth (right scale)

Robot density is defined as the number of robots per 10.000 employees

Robot density - number of robots per 10.000 employees

Russia: A year of changes

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Russia: Cabinet Reshuffle

Source: Levada Center, Moscow Carnegie Center; Morgan Stanley as at 15 January, 2020

Note: According to polls, in 2019 59% of respondents wanted decisive change, 31% insignificant change and 10% said no changes were needed.

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Russia: What does the country need?

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Russia: Portfolio flows

Zero Equity portfolio flows to Russia …as of yet

Source: IFF, as at 11 September, 2019

Russia : Debt and Equity portfolio flows (net), 2013 - 2019

Proxy Voting Results

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Baring Emerging Europe PLC - AGM Proxies Received

Resolution

In Favour Discretion Against Withheld

Votes %age Items Votes %age Items Votes %age Items Votes Items

1 5,433,527 99.96 27 259 0.01 2 1,891 0.03 1 0 0

2 4,496,154 82.82 25 259 0.01 2 931,937 17.17 5 7,327 3

3 5,423,033 99.90 27 259 0.01 2 5,058 0.09 3 7,327 3

4 5,433,527 99.99 27 259 0.01 2 0 0.00 0 1,891 1

5 5,427,720 99.91 28 259 0.01 2 4,138 0.08 1 3,560 1

6 5,145,517 94.68 27 259 0.01 2 288,701 5.31 2 1,200 1

7 5,141,266 94.67 26 259 0.01 2 288,701 5.32 2 5,451 2

8 4,502,562 82.88 27 259 0.01 2 929,296 17.11 2 3,560 1

9 5,428,476 99.96 27 259 0.01 2 1,491 0.03 1 5,451 2

10 5,428,321 99.92 26 259 0.01 2 3,631 0.07 3 3,466 2

11 5,430,092 99.95 27 259 0.01 2 2,360 0.04 1 2,966 2

12 5,428,857 99.87 28 259 0.01 2 6,498 0.12 1 63 1

13 5,424,137 99.82 25 259 0.01 2 9,327 0.17 4 1,954 2

14 5,431,952 99.94 27 259 0.01 2 2,966 0.05 2 500 1

15 5,428,329 99.92 28 259 0.01 2 3,760 0.07 1 3,329 1