2nd Apr 2026 10:39
(Alliance News) - JPMorgan Emerging Markets Dividend Income PLC on Thursday said it is optimistic about the outlook for emerging markets but noted that the global outlook is uncertain with the conflict in the Middle East likely to last longer than initially expected.
The investor in emerging market companies that offer both growth and a higher-than-average dividend yield said net asset value per share was 195.7 pence as at January 31, up 17% from 166.7p at July 31.
NAV total return was 20.2% in the six months to January 31, outperforming its benchmark, the MSCI Emerging Markets index, which had a return of 19.3%.
JPMorgan Emerging Markets Dividend said several stocks contributed positively to performance, including Samsung Electronics Co, ASE Technology, Asia Energia, as well as portfolio overweights in sectors such as financials, consumer discretionary and consumer staples.
Meanwhile, by far the largest detractor from relative performance was the firm's positioning in South Korea, despite the company having "a large position" in well-performing Samsung: "This was mostly due to stock selection, as we did not own SK Hynix [Inc], one of the world's key memory chip manufacturers benefitting from significant increases in the prices of memory technology."
Further, the company said its combined underweight exposure to the United Arab Emirates and Saudi Arabia "also enhanced relative performance," adding: "The region's exposure to weak oil prices slowed growth and weighed on stock prices, most notably in Saudi Arabia, which acted as a drag on equity market sentiment across the Gulf. Additionally, the currencies of both the UAE and Saudi Arabia are fixed against the US dollar, and this meant that these economies did not see the same currency tailwind from dollar depreciation as other EM economies."
Portfolio Manager Omar Negyal was cautious. He said while the company is optimistic about the outlook for emerging markets, the Middle East conflict looks likely to last longer than initially expected: "Recent events in the Middle East raise uncertainties about the near-term prospects of economies across the region. Oil price volatility is also likely to increase significantly if the conflict is not short-lived. However, overall, the current investment environment is supportive for EM and it is providing us with many interesting, varied and well-priced opportunities across countries and sectors. Our focus will remain on building a portfolio which provides shareholders with exposure to emerging markets' exciting growth story, while also delivering an attractive yield and regular income."
Chair Elisabeth Scott said: "At the time of writing, the global outlook is uncertain and the Middle East conflict looks likely to last longer than initially expected. Oil and gas prices have shot up as shipping is held up in the Straits of Hormuz. Stock markets have been turbulent and are likely to remain volatile while the hostilities persist.
"Nonetheless, the outlook for emerging markets is relatively bright, benefitting from domestic infrastructure spending, improvements in corporate governance, along with demographic advantages. These structural benefits will not disappear as a consequence of geopolitical volatility and are the underpinning of the long-term positive story. In times of uncertainty, shareholders can take comfort from the Investment Manager's style of investing. Emerging market companies which also pay dividends are inclined to be more prudent in their use of capital, a discipline which should ensure greater predictability of returns to shareholders."
JPMorgan Emerging Markets Dividend shares fell 2.2% to 175.55 pence each on Thursday morning in London.
By Tom Budszus, Alliance News slot editor
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