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Kotak mahindra bank q2 results: profit jumps 21% yoy to rs 3,608 crore; nii rises 24%.

Kotak Mahindra Bank Q2 Results: The private lender's net interest income (NII) stood at Rs 6,620 crore for July-September 2022 period. This was about 24% higher than NIIs of Rs 5,353 crore in the year-ago period.

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Kotak Mahindra Bank Q2 results: Net profit up 24%, aided by improved NIMs

The net interest income increased 23% to rs 6,297 cr from rs 5,099 cr a year ago.

Fees and services income expanded by 24 per cent y-o-y to Rs 2,026 crore in Q2FY24 from Rs 1,638 crore in Q2FY23, the bank said in a statement

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India's Kotak Mahindra Bank net profit jumps 24% in Q2, meets estimates

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Kotak Mahindra Bank Ltd. Investor Presentation

Kotak mahindra bank ltd. investor presentation: get insights into company performance, financials, capex plans and more.

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KOTAK MAHINDRA BANK LTD. - 500247 - Announcement under Regulation 30 (LODR)-Investor Presentation

KOTAK MAHINDRA BANK LTD. - 500247 - Investor Presen

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Kotak Mahindra Bank Ltd. Q2FY23; 27% Growth in Profits

Kotak Mahindra Bank Ltd. ‘s Net Interest Income for Q2 FY23 has increased by 27% YoY to ₹ 5,099 crores. Profit After Tax rose by 27% YoY to ₹ 2,581 crores. Operating Expenditure grew by 28% YoY for Q2 FY 2023.

Net Non Performing Assets (NNPA) fell to 0.55%. In this quarter’s  investor presentation , it is evident that the reason for the Operating Profit YoY growth to be 14% while Profits After Tax YoY growth to 27% is the significant reduction in Provisions and Contingencies by about 68% YoY.

To further read about this company, check out this link.

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• Calendar Kotak Mahindra Bank Limited

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• kotak mahindra bank latest quarterly result for q2fy24

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• 23 Oct 2023
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Kotak Mahindra Bank Q2 Results 2024: Net profit jumps

Kotak Mahindra Bank reported its Q2FY24 numbers on Saturday afternoon. On Friday, Kotak Mahindra Bank's share price closed at Rs 1,769 per share, up 1.80%. Let us look at Kotak Bank's result in detail.

About Kotak Mahindra Bank

Kotak Mahindra Bank is a leading private-sector bank, offering a wide range of financial products and services, including banking, insurance, and wealth management. Founded in 1985, it has grown to become one of the country's most prominent banking institutions, with a strong presence in various financial sectors.

Crucial parameters

• 52-week high: Rs 2,063.00
• Market Cap: Rs 3,51,697.25 crore

Share price movement

In the last one month, the bank's share price has traded flat on the positive side. In 2023, the share price has fallen by 3%, against positive NIFTY50 returns. For the 5-year time frame, the share price has given a sub-par return of only 52%, lower than the benchmark and peers.

How were Kotak Mahindra Bank's September quarter results?

Kotak Mahindra Bank Q2FY24 results details are as below:

Net Profit: The bank has reported a consolidated profit of Rs 4,461 crore, an excellent rise in net profits. The profits have increased from Rs 3606 crore in the year-ago period, recording a growth of 24% YoY. On a standalone basis, the net profit increased by 23.6% on the year to Rs 3,191 crore.

Net Interest Income (NII): Net Interest Income (NII) is used to measure the profitability of a bank's core lending and borrowing activities. It represents the difference between the interest earned from a bank's interest-earning assets, such as loans, advances, and investments, and the interest paid on its interest-bearing liabilities, like deposits and borrowings.

Kotak Mahindra Bank reported an NII of Rs 6,297 crore for the second quarter of the current financial year. The NII increased by 23.5% from Rs 5,099 crore reported for the same period of the last financial year. The Net Interest Margins (NIM) increased from 5.15% in Q2FY23 to 5.22% in Q2FY24.

Asset Quality: Kotak Mahindra Bank's Gross Net Performing Assets (GNPA) for the quarter ended September was 1.72%. It has decreased sharply from the 2.08% reported in the year-ago period and marginally from Q1FY24's GNPA of 1.77%. Net NPA lowered from 0.55% from a year ago period to 0.37%. Sequentially, the NNPA increased reduced by 3 basis points. In absolute terms, GNPA and NNPA for the quarter ended September stood at Rs 6,087 crore and Rs 1,275 crore, respectively.

Advances and Deposits: The Deposits reported by the bank for the quarter ending September were at Rs 4.01 lakh crore, increased from Rs 3.25 lakh crore from the year-ago period and Rs 3.86 lakh crore in Q2FY24. Net Advances have increased YoY by 21% to Rs 3.57 lakh crore and 6% sequentially. CASA ratio stood at 48.3%, down from 56.1% in Q2FY23, and 49% in Q1FY24.

Unsecured retail advances, including microfinance portfolio, stood at 11% as a percentage of net advances compared with 8.7% a year earlier. The retail microfinance portfolio saw maximum growth of 80% year-on-year to Rs 7,987 crore. This was followed by a growth of 59% to Rs 12,597 crore in credit cards. Personal, business, and consumer durables loans grew 35% to Rs 17,862 crore. The home loans and agriculture division saw the slowest growth of 15% to Rs 99,100 crore and 8% to Rs 27.03 crore, respectively.

Update from Subsidiaries

Kotak Mahindra Prime: It reported an NII of Rs 460 crore, a jump of nearly 13% from the year-ago period. PAT decreased from Rs 222 crore in Q2FY23 to Rs 202 crore in Q2FY24. NNPA fell sharply from 1.3% to 0.8% year on year.

Kotak Mahindra Life Insurance: The profit after tax (PAT) reduced to Rs 247 crore for the second quarter of the current financial year. In the same quarter last year, the PAT reported was Rs 270 crore. Overall Group Premium for Q2FY24 grew by 12% YoY.

Kotak Securities: Total Income from this business increased from Rs 766 crore in Q2FY23 to Rs 962 crore in Q2FY24. PAT increased to Rs 324 crore for the quarter ending September'23. Compared to last year (Sep quarter), the overall market share has increased from 5% to 8.8%.

Kotak Mahindra AMC: Average AUM for the September quarter stood at Rs 3.36 lakh crore, an excellent double-digit growth over the same period last year. PAT increased from Rs 106 crore to Rs 124 crore in Q2FY24.

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Kotak mahindra bank q3 results: profit rises 7% to ₹4,265 cr; asset quality improves, reacting to q3 numbers, shares of kotak mahindra bank rose as much as 3.6% to ₹1,829.50 crore, while m-cap increased to ₹3.6 lakh crore..

Kotak Mahindra Bank released its third quarter earnings report on Saturday, which showed that the private lender’s profitability rose during the October-December period, while its asset quality improved despite increase in provisions and contingencies.

Following the release of Q3 numbers, shares of Kotak Mahindra Bank rose as much as 3.6% to ₹1,829.50 crore on the BSE, while the market capitalisation (m-cap) increased to ₹3.6 lakh crore. Stock exchanges are open today for a special live session as the Maharashtra government declared a public holiday on January 22, owing to the consecration of the Ram Mandir in Ayodhya. 

Kotak Mahindra Bank, the country’s fourth largest private lender in terms of m-cap, has posted a 6.75% year-on-year (YoY) increase in its consolidated net profit at ₹4,264.78 crore as compared to ₹3,995.05 crore in Q3 FY23. On a standalone basis, the profit stood at ₹3,005 crore, up 7.6% from ₹2,792 crore in the same period last year.

The consolidated total income stood at ₹24,083.15 crore, growing by 31% from ₹18,371.64 crore in the third quarter of the previous financial year, Kotak Mahindra Bank says in an exchange filing today.

The net interest income of the bank stood at ₹14,494.96 crore as against ₹11,011.29 crore in the corresponding period of the previous fiscal, rising 31% on a YoY basis.

In the first nine months of the current financial year, Kotak Mahindra Bank's consolidated profit increased to ₹12,876 crore from ₹ 10,359 crore in the same period last year, up 24% YoY. The total income rose to 66,366.58 crore as against 47,375.52 crore in 9M FY23. The net interest income stood at ₹41,080.45 crore, up 36 % over ₹30,169.43 crore reported in the first nine months of the previous financial year.

On a standalone basis, the bank’s PAT increased to ₹9,648 crore in 9M FY24, up 30% YoY from ₹7,444 crore in the same period last year. The net interest income (NII) for 9MFY24 rose 24% YoY to ₹19,084 crore, while fees and services for 9MFY24 increased 23% YoY to ₹5,998 crore.

On the asset quality front, the gross non-performing assets (NPAs) stood at 1.68%, down from 1.91% in the year-ago quarter, while the net NPA dropped to 0.36% against 0.48% in Q3 FY23. The provisions and contingencies increased to ₹662 crore from ₹148.72 crore in Q3 FY23 and ₹454.64 crore in Q2 FY24. "The bank made a ₹143 crore provision (post tax) on applicable alternate investment fund (AIF) investments pursuant to RBI’s circular dated December 19, 2023," it said in the release.

Total advances rose 19% YoY to ₹3.72 lakh crore from ₹3.13 lakh crore last year, while average current deposits grew 5% to ₹59,337 crore compared to ₹56,372 crore last year. The current account and savings account (CASA) ratio of the bank stood at 47.7% at the end of the December quarter of FY24.

As of December 31, 2023, customers of the bank stood at 4.8 crore versus 3.9 crore as of December 31, 2022.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)

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ICICI Bank, Kotak Bank Q2 Results: Analytic Views On These 2 Private Banks Earnings; Stocks In Focus

Two leading private sector banks, Kotak Mahindra Bank and ICICI Bank will be in focus on Monday's trading session as the share prices of these behemoths will react to their Q2 earnings which was announced last week. Both banks have recorded double-digit growth in both PAT and net interest income, while their asset quality continued to improve with sharp drops in gross NPA and net NPA.

Last week, on Friday, ICICI Bank shares ended at Rs 932.45 apiece, down by 0.28% on BSE. The bank is the second largest bank in terms of market and its m-cap stood over Rs 6.53 lakh crore on October 20th.

The two banks declared their Q2FY24 earnings on October 21st.

Here's what investors need to know:

Kotak Mahindra Bank Q2 Results:

Q2FY24 PAT stood at Rs 3,191 crore of the bank, rising by 24% YoY, while net interest income (NII) surged by 23% YoY to Rs 6,297 crore. Net interest margins (NIM) stood at 5.22% in the quarter.

As of September 30, 2023, the bank's GNPA was 1.72% & NNPA was 0.37% (GNPA was 2.08% & NNPA was 0.55% at September 30, 2022). The provision coverage ratio stood at 79.1%.

Also, in Q1FY24, the total advances zoomed by 21% YoY to Rs 3,57,012 crore, while customer assets which comprise Advances (incl. IBPC & BRDS) and Credit Substitutes, increased by 18% YoY to Rs 3,80,412 crore.

Further, in the case of deposits, average Current deposits grew to Rs 58,351 crore for Q2FY24 compared to Rs 53,971 crore for Q2FY23 up 8%. Average Savings deposits stood at Rs 121,967 crore as of September 30, 2023 (Rs 122,595 crore as of September 30, 2022). Average Term deposit up 47% from Rs 139,871 crore for Q2FY23 to Rs 205,632 crore for Q2FY24.

Shreyansh Shah, Research Analyst, StoxBox said, "The Mumbai headquartered leading private lender Kotak Mahindra Bank reported a decent set of numbers in Q2FY24 with net profit marginally ahead of the market expectations and posting double-digit growth on a YoY basis. The bank continues its historical trend of being stringent regarding its asset quality. This was reflected in NPAs declining and pre-emptively accounting for additional provisioning."

As expected, Shah added, "There was NIM compression, and we feel that Kotak Mahindra Bank will have an extra pinch regarding NIM compression in the forthcoming quarters as well."

Moreover, the analyst explained that due to intense competition amongst the key players to acquire low-cost savings deposits, the bank faced the brunt and saw a decline in its addition of savings deposits this quarter. However, the bank's strategic focus on microfinancing, which grew by almost 80% on a YoY basis, will help to generate significant profits in absolute terms and reduce the sharp impact on NIMs. This can be seen with its newly acquired Sonata Finance. However, uncertainty over Uday Kotak's successor will make us watchful of the bank's roadmap going forward.

ICICI Bank Q2 Result:

During the September 2023 quarter, the bank's profit after tax grew by 35.8% year-on-year to Rs 10,261 crore. Also, the net interest income (NII) increased by 23.8% year-on-year to Rs 18,308 crore, while the net interest margin was 4.53% in Q2-2024 compared to 4.31% in Q2-2023 and 4.78% in Q1-2024.

Meanwhile, provisions (excluding tax provision) were ₹ 583 crore in Q2-2024 compared to ₹ 1,644 crore (US$ 198 million) in Q2-2023.

In terms of asset quality, the gross NPA ratio declined to 2.48% at September 30, 2023, from 2.76% at June 30, 2023. The net NPA ratio declined to 0.43% on September 30, 2023, from 0.48% on June 30, 2023, and 0.61% at September 30, 2022.

Under the loan book, the net domestic advances grew by 19.3% year-on-year and 4.8% sequentially on September 30, 2023. The retail loan portfolio grew by 21.4% year-on-year and 5.5% sequentially and comprised 54.3% of the total loan portfolio at September 30, 2023.

In regards to deposits, total period-end deposits increased by 18.8% year-on-year and 4.5% sequentially to Rs 12,94,742 crore on September 30, 2023. Period-end-term deposits increased by 31.8% year-on-year and 9.2% sequentially to Rs 7,67,112 crore in Q2FY24. Average current account deposits increased by 14.0% year-on-year in Q2-2024. Average savings account deposits increased by 4.5% year-on-year in Q2-2024.

On ICICI Bank's earnings, Stoxbox analyst said, India's second-largest private sector bank, ICICI Bank, reported impressive Q2FY24 results, beating market estimates significantly. Although nominal NIM compression was seen, this was absorbed by fee income, which the bank generated and exceeded the profit estimation. Though there was some impact on the bank's profitability due to treasury loss of Rs. 85 crores, similar to Q2FY23, the healthy net interest income could absorb it, thus showing healthy total income.

Further, Shah said, that due to its prudent provisioning policy, the bank's provision decreased significantly as it had lower slippages. The bank has a well-calibrated risk framework that helped it sustain a healthy asset quality. It is worth noting that through its aggressive focus on the adoption of digitisation, the bank activated more than one crore non-ICICI Bank account holders at the end of September 2023 through iMobile Pay.

Going forward, Shah added, "We feel that the bank's focus on rural lending with the opportunity of cross-selling the products through a vast network of branches & ATMs, and cash recycling machines will help the bank to continue reporting solid profits going forward. With RoA in Q2FY24 standing at 2.41% (annualised), which is in the range of 2.3-2.5% as guided by the bank's management, we are confident that the bank will grow double-digit and are optimistic about the bank."

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.

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Mains Articles for 8-May-2024

by Vajiram & Ravi

India opens up investment options for Russia to channel rupee balance

What’s in today’s article?

Why in news, increasing bilateral trade between india and russia, existing payment settlement mechanism between india and russia, payment issues faced by india and russia, new investment options for russia.

The RBI has allowed Russian entities to invest their rupee balance in various options like government securities, bonds, equity, and loans. This may soon end Russia's struggles with payments to India.

• Russia is now India’s second largest import source, after China, surpassing the UAE and the US. 
• In 2023-24, India’s imports from Russia increased 32.95 per cent to $ 61.44 billion, while its exports were at $4.26 billion, creating a trade deficit of $ 57.18 billion.
• Most of India’s import from Russia comprises oil, but there are also imports of defence equipment, fertilisers, edible fats and oil and precious and semi-precious stones and jewellery. 
• While payment for defence equipment was largely in rupee, payment for Russian oil was taking place in other currencies.
• Reasons behind the increase in bilateral trade
• Since the start of Ukraine war on February 24, 2022, Moscow has been hit by Western banking and economic sanctions. 
• Russia is now the largest supplier of oil to India, displacing traditional players such as Iraq, Saudi Arabia, and UAE.
• India, unlike the West, chose to not join the list of countries formally imposing sanctions on Moscow.
• India and Russia put in place a rupee payment system to circumvent the Western countries’ banking and economic sanctions against Russia following its attack on Ukraine in February 2022. 
• A Vostro account is a bank account that a correspondent bank holds on behalf of another bank, often a foreign bank.
• In this context, a rupee vostro account is a special account that authorized Indian banks open and maintain for the banks of their partner trading countries. 
• The account holds the foreign bank's holdings in the Indian counterpart in rupees. 
• When an Indian trader wants to pay a foreign trader in rupees, the amount is credited to the vostro account.
• SWIFT is a global secure interbank system whose primary function is to facilitate the secure exchange of financial messages between banks and other financial institutions. 
• These messages typically involve instructions for transferring funds, such as payment orders, securities trading information, and other types of financial transactions.
• Western countries did so by imposing a price cap of $60 per barrel.
• While India is not a formal signatory, it has tacitly agreed to maintain the price cap as much as possible.
• Until recently, the blends of oil India was importing from Russia were largely below the price cap fixed by G-7 countries and India was able to pay for the oil using dollars. 
• However, Russia has lowered its discounts due to high demand from China and lower grade oil is now in short supply.
• Challenges to rupee-rouble mechanism
• This mechanism was considered as an alternative payment mechanism to settle dues in rupees instead of dollars or euros.
• scepticism on the rupee-rouble convertibility as the rouble’s value is kept up by capital controls and not determined by the market.
• Russia finds the rupee to be volatile.
• India’s trade deficit with Russia touched $43 billion in 2022-23 .
• India imported goods worth $49.35 billion while its exports were at $3.14 billion. 
• This has led to staggering amounts of Indian rupees in Russian banks that cannot be used by Russia in its war efforts.
• The rising unused rupee balance for Russian entities in these accounts was a big concern for Russia.
• It was trying to repatriate some of it through various means including converting it to dirhams or yuan.
• In this backdrop, new mechanism was launched to enable Russia to invest the rupee balance in India itself.
• The RBI enabled countries holding rupee accounts to invest in government securities’/treasury bills in India. 
• Recently, a FEMA (Foreign Exchange Management Act) regulation has been amended making it easier for foreign investors to trade in derivatives.
• Russia is also being allowed to invest in equity and debt.
• Russian investments in India will not attract Western sanctions as these are rupee investments.

Q.1. What is Society for Worldwide Interbank Financial Telecommunication (SWIFT)?

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative that provides a secure messaging system for international money transfers between banks. SWIFT is the industry standard for financial message syntax and allows financial institutions to securely exchange electronic messages and information about financial transactions. 

Q.2. What is a vostro account?

A vostro account is a record of money that a correspondent bank holds for another bank, usually in the domestic currency of the country where the money is deposited.

Source: Russia halts rupee repatriation as India offers bouquet of investment options, say sources | The Hindu

The Kotak Mahindra Bank Controversy

Why were Actions on KMB Necessitated?

• Similar Actions by RBI in the Past

What will be the Impact of RBI’s Actions on KMB?

• The Reserve Bank of India (RBI) barred Kotak Mahindra Bank (KMB) from onboarding new customers on its online and mobile banking channels, and issuing fresh credit cards.
• It would however be allowed to provide these services to its existing customers.
• IT inventory and user access management,
• Data leak and leak prevention strategy,
• Business continuity and
• Disaster recovery rigour and drill, etc.
• This was based on the regulator’s examination of the private bank’s systems for two years (2022 and 2023).
• The regulator said KMB continually failed to address concerns in a “comprehensive and timely manner”.
• CAPs are part of an intervention scheme of the RBI to ensure robustness of regulated entities.
• As per the RBI, the compliances submitted by KMB were either “ inadequate, incorrect or not substantiated ”.
• In the latest incident, the bank’s customer care representative informed that its technical servers were experiencing “ intermittent slowness ”.
• The current measures would be reviewed in an external audit to be commissioned by the bank with RBI’s approval to assess remediation undertaken.

Similar Actions by RBI in the Past:

• The RBI has been particularly wary of how digital banking and the overall financial landscape functions.
• This was also based on a two-year assessment that had come across recurrent incidents of outage in its internet and mobile banking platforms, alongside payment utilities.
• The restrictions were lifted more than a year later in (March) 2022 after a successful remediation.
• This was also based on “ certain material supervisory concerns ” with the RBI demanding the rectification of observed deficiencies.
• For perspective , the private lender sold 95% of their personal loans and 99% of their (fresh) credit cards by digital means.
• The banks’ net profit in the fourth quarter rose 18% to ₹4,133 crore from ₹3,496 crore in the year-ago period. This was on the back of a 13% YoY growth in net interest income at ₹6,909 crore.
• According to S&P Global Ratings, the regulatory action may set back the bank’s credit growth and profitability .
• It added that credit cards are among the higher-yielding target growth segment of the bank. The portfolio grew 52% YoY as on December 31 last year compared with a total loan growth of 19%.
• Action by the RBI could push the bank to rely more on physical branch network expansion to supplement growth thus entailing higher operating costs .
• This is because credit cards accounted for only 4% of the bank’s total loans at the end of the year and it would still be able to cross-sell its products.
• However, the bank’s CEO stated that while the financial impact (from the RBI action) is expected to be minimal, he was more worried about the “ reputational impact ”.
• While the bank has made “significant progress” on technological enhancements, implementing changes and the external audit will take time.

Q.1. How does RBI supervise commercial banks?

The Banking Regulation Act, 1949 empowers the Reserve Bank of India to inspect and supervise commercial banks. These powers are exercised through on-site inspection and off-site surveillance.

Q.2. What is Prompt Corrective Action Framework (PCA) by RBI?

PCA is a system that the RBI imposes on banks showing signs of financial stress. The regulator considers banks as unsafe if they fail to meet the standards on certain financial metrics or parameters.

The Kotak Mahindra Bank controversy | Explained

© 2024 Vajiram & Ravi. All rights reserved

abrdn Emerging Markets Fund Q2 2024 Commentary

• Emerging market equities outpaced developed markets over the quarter, closing higher thanks largely to gains in June. Risk appetite benefited from weaker-than-expected U.S. inflation data in May.
• Sentiment was also driven by an artificial intelligence-led tech rally in Taiwan, alongside post-election strength in India and South Africa.
• Chinese stocks outperformed as policymakers rolled out further support measures for the economy.
• Our portfolio companies are businesses with quality characteristics, and they are overall delivering results, which we believe will be rewarded by the market.

Fund performance

The abrdn Emerging Markets Fund (Institutional Class shares net of fees) returned 2.85% 1 for the second quarter, but it underperformed the 5.00% return of its benchmark, the MSCI Emerging Markets Net Index 2 . Weak stock selection in China was partially mitigated by the outperformance of our holdings in Taiwan and India, as well as across the semiconductors, communication services, and materials sectors.

In China, our underweight to the market, which saw a revival of fortunes, proved negative. Several of our consumer-related stocks also underperformed, most notably our holdings in China Tourism Group Duty Free and Anta Sports ( OTCPK:ANPDY )( OTCPK:ANPDF ). Baijiu maker Kweichow Moutai fell on softer wholesale baijiu prices following a couple of one-off events that affected supply and demand dynamics. Despite near-term challenges, we remain optimistic about the company's ability to achieve sales growth beyond market expectations for the year. Separately, Contemporary Amperex Technology and Sungrow Power Supply were hurt by concerns over rising geopolitical risks and near-term fluctuations. Partially offsetting these negative effects was our core holding in Tencent, which reported robust first-quarter results that showed a turnaround in core gaming revenues and a surge in advertising revenues linked to more efficient monetization of its video accounts business.

In South Korea, Samsung Electronics' preferred shares lagged technology peers on the uncertainty around its high bandwidth memory (HBM) product qualifying for use by a key customer. HBM chips are designed to service the rapidly accelerating demand tied to artificial intelligence (AI). While disappointing, we believe the firm is on the right path to turning this around in the relatively near term. HD Korea Shipbuilding & Offshore Engineering did well on improving order flows, including large containers, and favorable new vessel pricing. Elsewhere in Indonesia, Bank Rakyat and Bank Negara underperformed due to general weakness in the market.

The exposure to Latin America was also costly. In Mexico, lender Banorte and conglomerate Fomento Economico Mexicano detracted. The latter was weak on negative earnings revision ahead of its results, which were slightly better than revised expectations. Brazilian consumer names also trailed, likely due to changing views towards the interest rate environment. This weighed on pharmacy retailer Raia Drogasil. Itausa, the holding company for lender Itau, declined amid rising concerns around the fiscal outlook.

What worked well were our tech and semiconductor positions, many of which benefited from an ongoing tech rally as well as from structural and cyclical tailwinds, including a recovery in the memory cycle. Among the top stock contributors were several of our Taiwanese holdings, such as chip makers Taiwan Semiconductor Manufacturing Co ( TSM ) and MediaTek ( OTCPK:MDTTF ), and electronics manufacturing services provider Delta Electronics ( OTCPK:DLEGF ). Switch maker Accton Technology beat consensus earnings expectations in the first quarter and raised its full-year guidance, thanks to robust demand from hyperscalers. Netherlands-listed ASM International also added value.

In India, UltraTech Cement ( OTC:UCLQF ) was buoyed by a rebound in real estate which, coupled with an uptick in domestic infrastructure development, has driven strong volume growth. The cement producer also announced that it would acquire a stake in a rival company, establishing its position as a key consolidator in the industry. HDFC Bank re-rated, while Power Grid Corporation of India rose on solid fundamentals, earnings visibility and a robust project pipeline.

Fund activity and positioning

We added several holdings given their attractive prospects. In emerging Asia, purchases included Taiwanese passive component maker Yageo, alongside Chinese battery maker Contemporary Amperex Technology and insurers Ping An Insurance ( OTCPK:PNGAY ) and PICC Property and Casualty ( OTCPK:PPCCF ). In India, we initiated Indian Hotels, automobile and farm equipment maker Mahindra & Mahindra ( OTC:MAHMF ) and ICICI Bank ( IBN ), which has a strong track record of managing credit risk.

Elsewhere, we bought Abu Dhabi-based Aldar Properties, a beneficiary of regional structural dynamics, and Nu Holdings, Latin America's largest fintech bank.

We sold Anglo American Platinum ( OTCPK:ANGPY ), B3 ( OTCPK:BOLSY ), Bank Rakyat ( OTCPK:BKRKY ), Hong Kong Exchanges and Clearing ( OTCPK:HKXCF ), Kotak Mahindra Bank, Li Auto ( LI ) and Maxscend Microelectronics.

Total Returns (as of 06/30/24)

Annual Calendar Year Returns (as of 12/31/23)

Market review

Emerging market equities outpaced developed markets over the quarter, closing higher thanks largely to gains in June. Risk appetite benefited from weaker-than-expected U.S. inflation data in May. We expect the Federal Reserve (Fed) to cut interest rates once in the second half of the year. Sentiment was also driven by an AI-led tech rally in Taiwan as well as post-election strength in countries like India and South Africa. Chinese stocks outperformed as policymakers rolled out further support measures for the economy, including a property rescue plan.

After an initial sell-off, Indian stocks resumed their rally following the election results as cabinet appointments for Prime Minister Narendra Modi's new coalition government pointed to political continuity. Existing ministers from his Bharatiya Janata Party retained most of the key ministries, which was a positive development in our view. In Mexico, the leftwing ruling party's landslide election victory sparked concerns over fiscal policy and constitutional change. South Africa unveiled a new coalition government after the governing party lost its parliamentary majority in polls.

Across regions, emerging Asia outperformed, helped by strong gains in Taiwan, India, and China. Latin America was a laggard, weighed down by weakness in Mexico and Brazil. Gulf bourses also fell amid lower oil prices and regional geopolitical tensions.

The outlook for emerging markets remains constructive. Once the Fed begins to cut rates, we would expect many emerging market central banks to follow suit in light of the ongoing disinflation trends seen across various parts of emerging markets. This, alongside structural tailwinds around the technology cycle, green transition, and near-shoring, will provide support for emerging market countries and companies.

China's recovery remains nascent, with continued weakness in the property market despite incremental stimulus. However, recent corporate results have underscored the strength of some business franchises. The policy environment also remains supportive, which bodes well for improving investor sentiment. Meanwhile, India's long-term prospects are still bright-it remains one of the world's fastest-growing major economies, backed by a significant transformation in physical and digital infrastructure, a resilient macro backdrop, and positive demographics.

Broadly, emerging market valuations remain undemanding, both relative to history and versus the U.S. Our portfolio companies are, on the whole, delivering results, which we believe will be rewarded by the market. They are businesses with discernible quality characteristics such as sustainable free cash flow generation and earnings growth, pricing power, and low debt levels. We continue to have conviction in our holdings and their ability to navigate the various crosswinds buffeting markets.

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