The information contained in this release was correct as at 31
May 2023. Information on the Company’s up to date net asset
values can be found on the London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI -
UK9OG5Q0CYUDFGRX4151)
All information is at 31May2023 and
unaudited.
Performance at month end with net income reinvested
|
One
month
% |
Three
months
% |
One
year
% |
Three
years
% |
Five
years
% |
Sterling: |
|
|
|
|
|
Net asset value^ |
6.5 |
6.9 |
4.4 |
52.1 |
18.3 |
Share price |
6.6 |
2.7 |
-7.3 |
45.9 |
22.8 |
MSCI EM Latin America
(Net Return)^^ |
0.5 |
0.3 |
-2.2 |
48.0 |
17.4 |
US Dollars: |
|
|
|
|
|
Net asset value^ |
5.0 |
9.4 |
2.8 |
52.6 |
10.2 |
Share price |
5.1 |
5.2 |
-8.8 |
46.4 |
14.5 |
MSCI EM Latin America
(Net Return)^^ |
-0.9 |
2.7 |
-3.8 |
48.4 |
9.3 |
^cum income
^^The Company’s performance benchmark (the MSCI EM Latin America
Index) may be calculated on either a Gross or a Net return basis.
Net return (NR) indices calculate the reinvestment of dividends net
of withholding taxes using the tax rates applicable to non-resident
institutional investors, and hence give a lower total return than
indices where calculations are on a Gross basis (which assumes that
no withholding tax is suffered). As the Company is subject to
withholding tax rates for the majority of countries in which it
invests, the NR basis is felt to be the most accurate, appropriate,
consistent and fair comparison for the Company.
Sources: BlackRock, Standard & Poor’s Micropal
At month end
Net asset value - capital only: |
426.42p |
Net asset value - including
income: |
431.49p |
Share price: |
371.00p |
Total assets#: |
£127.5m |
Discount (share price to cum income
NAV): |
14.0% |
Average discount* over the month –
cum income: |
14.0% |
Net gearing at month end**: |
0.3% |
Gearing range (as a % of net
assets): |
0-25% |
Net yield##: |
8.3% |
Ordinary shares in issue(excluding
2,181,662 shares held in treasury): |
29,448,641 |
Ongoing charges***: |
1.1% |
#Total assets include current year revenue.
##The yield of 8.3% is calculated based on total dividends declared
in the last 12 months as at the date of this announcement as set
out below (totalling 37.32 cents per
share) and using a share price of 459.82 US cents per share
(equivalent to the sterling price of 371.00
pence per share translated in to US cents at the rate
prevailing at 31 May 2023 of
$1.2395 dollars to £1.00).
2022 Q2 Interim dividend of 5.74
cents per share (paid on 12 August
2022).
2022 Q3 Interim dividend of 6.08
cents per share (paid on 9 November
2022).
2023 Q4 Interim dividend of 6.29
cents per share plus a Special Dividend of 13.00 cents per share (paid on 12 January 2023).
2023 Q1 Interim dividend of 6.21
cents per share (Paid on 16 May
2023)
*The discount is calculated using the cum income NAV (expressed
in sterling terms).
**Net cash/net gearing is calculated using debt at par, less cash
and cash equivalents and fixed interest investments as a percentage
of net assets.
*** The Company’s ongoing charges are calculated as a percentage of
average daily net assets and using the management fee and all other
operating expenses excluding finance costs, direct transaction
costs, custody transaction charges, VAT recovered, taxation and
certain non-recurring items for the year ended 31 December 2022.
Geographic
Exposure |
% of
Total Assets |
% of Equity
Portfolio * |
MSCI EM Latin
America Index |
Brazil |
60.5 |
60.6 |
59.0 |
Mexico |
25.8 |
25.7 |
31.0 |
Chile |
5.6 |
5.6 |
6.1 |
Argentina |
4.1 |
4.1 |
0.0 |
Colombia |
2.4 |
2.4 |
1.0 |
Panama |
1.6 |
1.6 |
0.0 |
Peru |
0.0 |
0.0 |
2.9 |
Net current Assets(inc. fixed
interest) |
0.0 |
0.0 |
0.0 |
|
----- |
----- |
----- |
Total |
100.0 |
100.0 |
100.0 |
|
===== |
===== |
===== |
^Total assets for the purposes of these calculations exclude
bank overdrafts, and the net current assets figure shown in the
table above therefore excludes bank overdrafts equivalent to 0.4%
of the Company’s net asset value.
Sector |
% of Equity
Portfolio* |
% of
Benchmark* |
Financials |
26.2 |
25.3 |
Materials |
17.5 |
19.8 |
Consumer Staples |
14.1 |
16.8 |
Energy |
12.3 |
10.6 |
Industrials |
11.7 |
8.9 |
Consumer Discretionary |
5.3 |
2.0 |
Health Care |
4.1 |
1.9 |
Real Estate |
3.7 |
0.8 |
Communication Services |
2.7 |
7.0 |
Information Technology |
2.4 |
0.5 |
Utilites |
0.0 |
6.4 |
|
----- |
----- |
Total |
100.0 |
100.0 |
|
===== |
===== |
|
|
|
*excluding net current assets & fixed interest
Company |
Country of Risk |
% of
Equity Portfolio |
% of
Benchmark |
Petrobrás – ADR: |
Brazil |
|
|
Equity |
|
7.8 |
3.9 |
Preference Shares |
|
1.5 |
4.4 |
Banco Bradesco – ADR: |
Brazil |
|
|
Equity |
|
4.9 |
0.7 |
Preference Shares |
|
1.7 |
2.9 |
Grupo Financiero Banorte |
Mexico |
6.2 |
3.7 |
Vale – ADS |
Brazil |
5.6 |
8.6 |
FEMSA - ADR |
Mexico |
5.4 |
3.5 |
B3 |
Brazil |
4.8 |
2.9 |
AmBev – ADR |
Brazil |
3.5 |
2.4 |
Itaú Unibanco – ADR |
Brazil |
3.4 |
4.5 |
Gerdau – Preference shares |
Brazil |
3.2 |
1.0 |
Grupo Aeroportuario del Pacifico -
ADS |
Mexico |
3.1 |
1.0 |
|
Commenting on the markets,
Sam Vecht and Christoph Brinkmann, representing the Investment
Manager noted;
The Company’s NAV was up 6.5% in May, outperforming the
benchmark, MSCI EM Latin America Index which returned 0.5% on a net
basis over the same period. All performance figures are in sterling
terms with dividends reinvested.1
In Latin America, Argentina and Brazil outperformed in May (USD +3.8%m/m and
+0.6% m/m respectively), while the rest of the region was down,
Colombia (USD -6.7%m/m),
Mexico (USD -2.6%m/m and
Chile (USD -3.3%m/m).
From a country perspective, Brazil has been the key contributor to
performance. We have been overweight domestic, interest-rate
sensitive stocks in Brazil since
the start of the year and this position has finally paid off in
May. There has been a material shift in sentiment in the Brazilian
market after the fiscal outlook improved and inflation undershot
expectations for several months. This has led investors to move
forward their expectations for the start of the easing cycle in
Brazil, which shifted the yield
curve down and supported asset prices.
Separately, our underweight and stock positioning in
Mexico and Peru also helped relative returns. There were
no detractors from country positioning, we saw positive relative
returns in all country positions.
From a single name perspective, Hapvida, a Brazilian health care
service provider, has been the best performer. The stock sold off
sharply in March as the market focused on 4Q23 results, but since
then the balance sheet has been recapitalized and the company
decided to raise prices more significantly, which should improve
margins going forward. We had added to this position during the
sell-off in March. Low-income homebuilder MRV and investment
management platform XP also performed very well as their earnings
outlook is sensitive to lower interest rates (as lower rates make
housing more affordable in the case of MRV and lead to flows from
fixed income to equities in the case of XP). Our underweight
position in Vale, a Brazilian iron ore miner, continued to help
relative returns, as iron ore prices declined on the back of
disappointing commodity demand in China. Globant, a software company based in
Argentina, performed strongly
after reporting stronger revenue growth than most global peers.
On the other side, our overweight in Brazilian supermarket
chain, Assai, has continued to underperform as food retail sales
were below expectations in April/May. Tenaris, the off-benchmark
steel pipe manufacturer in Argentina, underperformed as it’s been trading
down together with the weakness in the oil price. Banorte, a
leading Mexican bank, detracted as the market is anticipating an
end to the rate hiking cycle in Mexico. Chilean brewer CCU, weighed on returns
post weak Q1 earnings results reported in May.
Considering the very strong performance of domestic Brazilian
assets during May, we have started to trim our positions in
Brazil, as a result our exposure
to Brazil has been reduced. We
added to our position in Globant, taking advantage of the
underperformance as an opportunity to add to our position. We
reduced our position in Braskem after the stock spiked on the back
of a buyout offer and we trimmed our position in Cemex, a cement
supplier in Mexico, to reduce our
exposure to US cyclicality. We also initiated positions in two
names in May, Mag Silver, a silver miner operating in Mexico, which is ramping up its key asset this
year and recently reached commercial production. In addition, we
initiated a position in Ecopetrol, an oil and gas company in
Colombia, where the government has
committed to pay outstanding receivables that the government owes
the company.
Our largest overweight is in Argentina as we hold two off-benchmark names.
While we have reduced the weight in Brazil, by taking profit in several names, it
remains the second largest overweight. We are most underweight
Mexico and Peru.
Outlook
In Brazil, domestic activity
has slowed down materially as monetary policy is very restrictive.
Inflation has already declined significantly to 3.94% in May, which
means that the policy rate can likely be lowered from the current
high level of 13.75% over the next six months. The government’s
fiscal framework is more orthodox versus market expectations, which
helps to reduce uncertainty regarding the fiscal outlook and is key
for the central bank to start reducing rates. A reduction in
interest rates is the most important support for both the economy
and the equity market.
Mexico remains defensive as
both fiscal and the current account are in order however, concerns
remain on how the market will behave if the US goes into a
recession. Banxico has raised their interest rates to 11% and with
inflation receding to 6%, they can stay on hold there before
reducing rates later in the year. High interest rates have
attracted financial flows in the form of carry trades and the
Mexican peso has appreciated strongly year-to-date. Our lower
allocation in Mexico is largely a
result of locking in strong performance.
In Peru, political uncertainty
and social unrest will continue to weigh on market performance. The
lack of support for the government and increased fragmentation in
congress represent a difficult environment to form an effective
government.
The recent constitutional election in Chile has resulted in a very strong outcome
for the conservative, right-wing parties, in a sign that the
population has lost confidence in the policies of leftist President
Boric. We believe this is positive from a market perspective, as it
should result in stronger checks and balances on the government and
removes the risk of a radical new constitution. However, we have
not yet increased our exposure because economic activity continues
to be weak due to the hangover from past years’ pension
withdrawals.
There have been some negative developments in Colombia in recent months. President Pero
removed the majority of his cabinet including the orthodox Finance
Minister, who had been the last point of trust and stability from a
market perspective. We believe this is a sign that Petro will act
in a more radical way going forward.
We continue to have a negative view on the Argentinian economy
as the government’s policies of increasing the monetary base while
being unwilling to devalue the currency creates large imbalances
and inflation. Our off-benchmark positions in Argentina are not exposed to the domestic
economy as they generate revenues from exports globally.
1Source: BlackRock, as of 31
May 2023.
20 June 2023
ENDS
Latest information is available by typing
www.blackrock.com/uk/brla on the internet, "BLRKINDEX" on Reuters,
"BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).
Neither the contents of the Manager’s website nor the contents of
any website accessible from hyperlinks on the Manager’s website (or
any other website) is incorporated into, or forms part of, this
announcement.