The
information contained in this release was correct as at
31 July 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
31 July
2023 and
unaudited.
Performance
at month end with net income reinvested
|
One
month
%
|
Three
months
%
|
One
year
%
|
Three
years
%
|
Five
years
%
|
Sterling:
|
|
|
|
|
|
Net
asset value^
|
5.4
|
23.3
|
36.2
|
57.9
|
26.2
|
Share
price
|
9.0
|
26.6
|
32.6
|
61.3
|
30.9
|
MSCI
EM Latin America
(Net
Return)^^
|
3.9
|
14.1
|
23.8
|
52.7
|
24.0
|
US
Dollars:
|
|
|
|
|
|
Net
asset value^
|
6.6
|
26.2
|
44.0
|
54.8
|
23.8
|
Share
price
|
10.3
|
29.5
|
40.3
|
58.2
|
28.5
|
MSCI
EM Latin America
(Net
Return)^^
|
5.1
|
16.8
|
30.9
|
49.7
|
21.6
|
^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:
|
489.49p
|
Net
asset value - including income:
|
493.54p
|
Share
price:
|
434.50p
|
Total
assets#:
|
£145.4m
|
Discount (share
price to cum income NAV):
|
12.0%
|
Average discount*
over the month – cum income:
|
10.8%
|
Net
Cash at month end**:
|
0.4%
|
Gearing range (as
a % of net assets):
|
0-25%
|
Net
yield##:
|
7.0%
|
Ordinary shares
in issue(excluding 2,181,662 shares held in treasury):
|
29,448,641
|
Ongoing
charges***:
|
1.13%
|
#Total assets
include current year revenue.
##The
yield of 7.0% is calculated based on total dividends declared in
the last 12 months as at the date of this announcement as set out
below (totalling 39.12 cents per
share) and using a share price of 559.05 US cents per share
(equivalent to the sterling price of 434.50
pence per share translated in to US cents at the rate
prevailing at 31 July 2023 of
$1.2867 dollars to £1.00).
2022
Q3 Interim dividend of 6.08 cents per
share (paid on 9 November
2022).
2022
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)
2023
Q2 Interim dividend of 7.54 cents per
share (Payable on 11 August
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
|
59.6
|
59.8
|
59.8
|
Mexico
|
26.6
|
26.7
|
30.1
|
Chile
|
5.5
|
5.5
|
5.9
|
Argentina
|
3.5
|
3.5
|
0.0
|
Colombia
|
2.9
|
2.9
|
1.2
|
Panama
|
1.5
|
1.6
|
0.0
|
Peru
|
0.0
|
0.0
|
3.0
|
Net
current Assets(inc. fixed interest)
|
0.4
|
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 0.0% of the Company’s net
asset value.
Sector
|
% of Equity Portfolio*
|
% of Benchmark*
|
Financials
|
26.2
|
25.3
|
Materials
|
17.1
|
19.2
|
Consumer
Staples
|
16.9
|
16.3
|
Energy
|
12.2
|
11.8
|
Industrials
|
9.5
|
9.0
|
Consumer
Discretionary
|
7.1
|
1.9
|
Health
Care
|
4.2
|
2.1
|
Real
Estate
|
2.6
|
0.7
|
Communication
Services
|
2.2
|
6.7
|
Information
Technology
|
2.0
|
0.5
|
Utilites
|
0.0
|
6.5
|
|
-----
|
-----
|
Total
|
100.0
|
100.0
|
|
=====
|
=====
|
|
|
|
*excluding
net
current assets & fixed interest
Company
|
Country of Risk
|
% of
Equity Portfolio
|
% of
Benchmark
|
Petrobrás –
ADR:
|
Brazil
|
|
|
Equity
|
|
7.3
|
4.2
|
Preference
Shares
|
|
1.7
|
4.8
|
Banco
Bradesco – ADR:
|
Brazil
|
|
|
Equity
|
|
4.7
|
0.8
|
Preference
Shares
|
|
1.8
|
2.9
|
Grupo
Financiero Banorte
|
Mexico
|
5.9
|
3.8
|
Vale
– ADS
|
Brazil
|
5.9
|
7.6
|
FEMSA
- ADR
|
Mexico
|
5.2
|
3.4
|
B3
|
Brazil
|
4.6
|
2.8
|
AmBev
– ADR
|
Brazil
|
4.3
|
2.3
|
Grupo
Aeroportuario del Pacifico – ADS
|
Mexico
|
3.7
|
0.8
|
Itaú
Unibanco – ADR
|
Brazil
|
3.3
|
4.5
|
Gerdau –
Preference shares
|
Brazil
|
3.3
|
1.1
|
|
Commenting
on the markets, Sam Vecht and
Christoph Brinkmann, representing
the Investment Manager noted;
The
Company’s NAV was up by 5.4% in July, outperforming the benchmark,
the MSCI EM Latin America Index, which returned 3.9% on a net basis
over the same period. All performance figures are in sterling terms
with dividends reinvested.1
Latin America had another strong month of
performance, gaining +5.1% in July with all markets posting
positive returns. Colombia
(+13.7%) was the best performer on the back of rising Brent crude
oil prices and expectations that the Central Bank will cut rates
soon. Peru (+11.6%) was another
strong performer, helped by a rise in copper prices. The remaining
regions also posted positive returns; Chile +5.8%, Brazil +4.9% and Mexico +4.6%.
From
a country perspective, Brazil was
the biggest contributor to overall portfolio returns, with strong
security selection within the Consumer Discretionary space.
Mexico was another strong
contributor, helped by our overweight in the Financial sector.
Exposure to Colombia also
contributed on the margin. The main detractors over the course of
July were Peru and Chile.
Gerdau SA, the
Brazilian steel manufacturer, was the month's best performing stock
on the back of increased market optimism regarding stimulus
measures in China, which would
support globally commodity prices including steel. An off-benchmark
exposure through Brazilian low-income homebuilder, MRV, also
benefitted the portfolio. The company reported record pre-sales
numbers, up 48% year-on-year. This is a highly levered name that
should continue to benefit from the upcoming rate cuts in the
country. Pagseguro, the Brazilian payments acquirer that we
initiated a position in last month, also performed well on the back
of the same rate cuts expectations. Elsewhere in the region, an
overweight allocation to Mexican bank, Banorte, also helped
returns. While the increase in
net
profits in the second quarter of 2023 was below consensus
expectations, the share price was helped by an upward earnings
guidance and the announcement of an extraordinary dividend to be
paid at the end of this year. As for detractors to performance over
the course of July, not owning Prio, the Brazilian oil & gas
company, hurt returns following a rebound in the oil price. Our
underweight position in Southern Copper Corporation, the Peruvian
copper company, also weighed on returns as the stock also rallied
on hopes for a Chinese policy stimulus.
We
made a few changes to the portfolio in July. We continued to take
profits in names that have performed well in Brazil, primarily through trimming our
exposure to the Brazilian stock exchange, B3, as well taking some
profits in Gerdau. We have reinvested some of the Gerdau proceeds
into Vale, on the belief that this name represents better relative
value for a similar commodity exposure (for example Vale produces
iron ore and Gerdau long steel). We exited our position in Movida,
the Brazilian car rental company, and reinvested this into Vamos, a
truck leasing company, also based in Brazil. We believe the stock is trading at a
cheap valuation and expect the company to benefit from the rate
cuts due to company's current leverage levels. We also exited our
position in Cemex, the Mexican cement producer, and used some of
the proceeds to top up our holding in Walmex. The latter has
underperformed on cost pressures and disinflation, but we believe
that the negative earnings revisions are bottoming out. We also
added to Grupo Aeropuerto Mexico, the Mexican airport operator, as
the stock has corrected due to continued market concerns around
concession assets in Mexico.
Outlook
Our
stance on Brazil remains positive
as our thesis of slowing inflation and sound fiscal policies have
partially played out, and we expect a monetary easing cycle to
start imminently. Interest rate cuts are now being priced in by the
market participants and the equity market has rallied strongly on
the back of this. However, while foreign capital has started to
flow into Brazil, local equity
flows have continued to be negative year-to-date as the equity
market struggles to compete with a risk-free rate of return of
close to 14%. We therefore believe there is more room for gains
over the next 12-18 months. While we have reduced our positions in
Brazil overall following the
recent strong performance, it remains a dominant bet in the
portfolio.
We
are also positive on the outlook for the Mexican economy as it is a
key beneficiary from the re-shoring of global supply chains.
Mexico remains defensive as both
fiscal and the current accounts are in order. While our view
remains positive, we have taken profits after a strong relative
performance, solely because we see even more upside in other Latin
American markets such as Brazil.
In addition, we believe that the Mexican economy will be relatively
more sensitive to a potential slowdown in economic activity in
the United States in response to
rising interest rates there.
During July, we
spent a few days in Argentina to
meet with politicians and the Ministry of Finance in order to get a
better understanding of the economic and political situation ahead
of the upcoming elections.
The
market has rallied strongly in recent months, Argentina is up 45.5% year-to-date, as the
market is expecting the opposition to win. However, we believe that
the economic situation will remain challenging and difficult,
irrespective of who will form the next government. Since markets
have rallied so much already (leaving less room for errors), we
currently have no positions with exposure to domestic Argentina, the two names we hold are global
exporters.
In a
global context, we remain optimistic about Latin America as a whole. Central banks have
been proactive in increasing interest rates to help control
inflation, which has started to fall across most countries in the
region. We will likely see central banks begin to lower rates in
the near term, which should support both economic activity and
asset prices. In addition to this normal economic cycle, the whole
region is benefitting from being relatively isolated from global
geopolitical conflicts. We believe that this will lead to both an
increase in foreign direct investment and an increase in allocation
from investors across the region.
1Source:
BlackRock, as of 31 July
2023.
24 August 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.