BlackRock Latin American Investment Trust Plc Portfolio Update
October 30 2023 - 2:53PM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 30 September 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 30 September 2023 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ 0.9 -1.8 13.4 62.0 24.9
Share price -1.2 -0.4 13.8 55.7 31.5
MSCI EM Latin America 1.4 -0.8 9.2 61.4 22.7
(Net Return)^^
US Dollars:
Net asset value^ -2.8 -5.7 24.0 53.0 16.9
Share price -4.9 -4.4 24.5 47.1 23.2
MSCI EM Latin America -2.3 -4.7 19.4 52.4 14.8
(Net Return)^^
^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: 452.49p
Net asset value - including income: 459.94p
Share price: 397.00p
Total assets#: £141.9m
Discount (share price to cum income 13.7%
NAV):
Average discount* over the month - 14.2%
cum income:
Net Gearing at month end**: 4.9%
Gearing range (as a % of net 0-25%
assets):
Net yield##: 8.3%
Ordinary shares in issue(excluding 29,448,641
2,181,662 shares held in treasury):
Ongoing charges***: 1.13%
#Total assets include current year revenue.
##The yield of 6.8% is calculated based on total dividends declared in the last
12 months as at the date of this announcement as set out below (totalling 40.06
cents per share) and using a share price of 484.56 US cents per share
(equivalent to the sterling price of 397.00 pence per share translated in to US
cents at the rate prevailing at 30 September 2023 of $1.221 dollars to £1.00).
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 (Paid on 11 August 2023)
2023 Q3 Interim dividend of 7.02 cents per share (Payable on 09 October 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 % of Equity MSCI EM Latin America Index
Total Portfolio *
Assets
Brazil 59.2 59.2 61.7
Mexico 26.9 26.8 28.4
Chile 5.8 5.8 5.8
Argentina 3.4 3.4 0.0
Colombia 3.3 3.3 1.1
Panama 1.5 1.5 0.0
Peru 0.0 0.0 3.0
Net current -0.1 0.0 0.0
Liabilities (inc.
fixed interest)
----- ----- -----
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 4.8% of the Company's net asset value.
Sector % of Equity Portfolio* % of Benchmark*
Financials 24.3 24.8
Materials 18.1 18.3
Consumer Staples 16.7 16.6
Energy 11.0 13.7
Consumer Discretionary 9.5 1.8
Industrials 9.2 10.5
Health Care 4.3 1.9
Real Estate 2.8 0.9
Information Technology 2.1 0.4
Communication Services 2.0 4.4
Utilites 0.0 6.7
----- -----
Total 100.0 100.0
===== =====
*excluding net current assets & fixed interest
Company Country of Risk % of % of
Equity Portfolio Benchmark
Vale - ADS Brazil 9.2 8.0
Petrobrás - ADR: Brazil
Equity 5.5 4.9
Preference 3.2 5.8
Shares
Banco Bradesco - Brazil
ADR:
Equity 4.1 0.7
Preference 1.5 2.7
Shares
Grupo Financiero Mexico 5.5 3.8
Banorte
FEMSA - ADR Mexico 5.0 3.7
B3 Brazil 4.9 2.5
AmBev - ADR Brazil 4.2 2.2
Grupo Aeroportuario Mexico 3.7 1.1
del Pacifico - ADS
Walmart de México y Mexico 3.4 3.5
Centroamérica
Hapvida Brazil 3.3 0.9
Participacoes
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
The Company's NAV was up 0.9% in September, underperforming the benchmark, MSCI
EM Latin America Index, which returned 1.4% on a net basis over the same period.
All performance figures are in sterling terms with dividends reinvested.1
September was a weak month for Latin American equities (USD -2.3% month-on
-month(/m), with negative returns in Peru (USD -7.5% m/m), Mexico (USD -6.4%
m/m) and Chile (USD -5.9% m/m). Colombia (USD 4.5% m/m) outperformed the region,
while Brazil was flat (USD 0.2% m/m). This compares positively with the
performance of global equities (USD -4.3% m/m) and broader Emerging Markets (USD
-2.6% m/m). On a year-to-date basis, Latin America remains the best performer
(+12.9%) compared to Developed Markets (+11.1%) and broader Emering Markets
(USD+1.8%).2
In terms of the portfolio, Mexico and Colombia were the top contributors from a
country perspective. The returns in Mexico were driven by stock selection in the
real estate sector and underweight positions in the telecommunications sector.
In Colombia, stock selection in the Energy and Financial sectors drove positive
returns. Brazil was the main detractor during the month. This was partially
domestically driven as the Finance Ministry announced measures to raise more
taxes from certain sectors. In addition, the rise in US interest rates in
response to strong US economic data has also pushed up the interest rates in
Brazil, which in turn hurt the domestic, rate-sensitive stocks.
On an issuer level Fibra Uno, Hapvida, Ecopetrol and Cemex were among the top
contributors to performance during the month. Fibra Uno, a real estate company
in Mexico, shares jumped early in the month as the company announced intentions
to carve out its industrial real estate portfolio. Hapvida, a health care
operator in Brazil, saw some strength despite the weaker market sentiment, as
the expectations for a normalization in their margins are being brought forward
on strong price increases. Ecopetrol, a petroleum producer in Colombia,
outperformed on the back of higher oil prices. Lastly, Cemex, the Mexican cement
producer, was among the top contributors on a relative basis. Being underweight
to the stock helped the portfolio returns as the stock declined on the back of
fears of rising input costs.
The Consumer Discretionary sector in Brazil has been particularly weak recently
as the sector has been repriced on the back of higher interest rate expectations
(largely driven by the rise in US interest rates) and a still weak Brazilian
economy in 3Q23. Among the key detractors during the period under review were
shoe retailer Arezzo, real estate developer, EZ Tec and truck leasing company,
Vamos. Our position in MAG Silver, a silver mining company in Mexico, also
detracted from performance on the back of lower silver prices.
We regard the weakness in the Brazilian equity market as a buying opportunity,
and we have added to our positioning in September. We remain positive on Brazil,
the country is in the early stages of a monetary easing cycle, and we expect the
economy to recover as rates continue to come down. We believe that the rise in
US interest rates have pushed up Brazilian rates to levels that are not aligned
with the outlook for the Brazilian economy and inflation. As a result, We have
added to our positions in the retail sector on the back of low valuations and we
believe we are at the cyclical bottom for the sector's earnings outlook.
Names we have added to in the month include Alpargatas, a footwear manufacturer
and Soma, a fashion retailer. We initiated a new position in Lojas Renner, a
clothing department store and have added to existing holdings in Brazil at the
start of the month following the impact of the tax measures, including Vamos,
B3, Ambev, and Hapvida.
The portfolio is overweight to Argentina (with two off-benchmark positions), and
Colombia. We are underweight to Peru and Mexico. From a sector position we are
overweight Consumer Discretionary and Industrials and underweight Utilities and
Communication Services.
Outlook
We remain optimistic about Latin America. Central banks have been proactive in
increasing interest rates to help control inflation, which has started to fall
across most countries in the region. With inflation at the lower range, we have
started to see central banks beginning to lower interest rates, 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.
Brazil is the showcase of this thesis, with the Brazilian central bank cutting
the policy rate by 50bps in both August and September 2023. The government's
fiscal framework being more orthodox than market expectations also helped to
reduce uncertainty regarding the fiscal outlook and was key for confidence. We
expect further upside to the equity market in the next 12-18 months as local
capital starts flowing into the market.
We remain positive on the outlook for the Mexican economy as it is key for the
re-shoring of global supply chains, though we have reduced our overweight
position, locking in outperformance versus our positioning a year ago. We also
note 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.
1Source: BlackRock, as of 30 September 2023.
2Source: Bloomberg, as at 24 October 2023
30 October 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.
This information was brought to you by Cision http://news.cision.com
END
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