News

During the first half of 2012 the difficult environment in the international financial markets and the fear of a worldwide economical downturn affected the emerging markets and the shares of Eastern European energy & commodity companies. 

During the reporting period, EEII’s (the “Company”) net asset value per share (NAV) declined by 47% from CHF 22.44 to 11.99 per share. This disproportionate decrease is mainly explained by the dividend payment of CHF 3.50 per share the Company distributed to its shareholders in the first quarter 2012. This dividend payout to shareholders amounted to CHF 5,343,533. Without accounting for the EEII dividend payment, the NAV would have decreased by 31% in the first half year 2012, about in line with the overall decrease of the Ukrainian stock market. 

In absolute terms the Company reports a net loss of CHF 10.6 million (H1 2011: gain of CHF 4.7 million). The loss is primarily attributable to the negative development of Ukrnafta’s share price, one of the main portfolio investments, which lost 57% or CHF 7.4 million in value during the first semester 2012. The other two main holdings, ENRC and Gazprom, lost 33% and 10% respectively in the reporting period. The value of Ukrainian electricity shares in local currency decreased by 26%. However, these companies still represent a minor share of today’s portfolio and have a limited impact on the NAV.

This recent development in portfolio valuation reflects the risks inherent in emerging markets such as Ukraine, Russia or Kazakhstan and the associated volatility. The first half of 2012 has shown a continuation of high volatility in the international commodity markets, and the worldwide economic indicators demonstrate a mixed picture.

Although the board of EEII is well aware, that the Company’s investment portfolio can continue to develop in a volatile manner the Company is keeping to its positions and its positive long term view of the energy and infrastructure markets in Eastern Europe. The Board of EEII is convinced that the equity investments of EEII are still a good opportunity to participate in the economic upswing in Eastern Europe countries.

For further details also see the half-year report 06-30-2012.