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
month
%
|
Three
months
%
|
One
year
%
|
Three
years
%
|
Five
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
(Net
Return)^^
|
1.4
|
-0.8
|
9.2
|
61.4
|
22.7
|
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
(Net
Return)^^
|
-2.3
|
-4.7
|
19.4
|
52.4
|
14.8
|
^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 NAV):
|
13.7%
|
Average discount*
over the month – cum income:
|
14.2%
|
Net
Gearing at month end**:
|
4.9%
|
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***:
|
1.13%
|
#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 Total Assets
|
% of Equity Portfolio *
|
MSCI EM Latin America Index
|
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 Liabilities (inc. fixed interest)
|
-0.1
|
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 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
Equity Portfolio
|
% of
Benchmark
|
Vale
– ADS
|
Brazil
|
9.2
|
8.0
|
Petrobrás –
ADR:
|
Brazil
|
|
|
Equity
|
|
5.5
|
4.9
|
Preference
Shares
|
|
3.2
|
5.8
|
Banco
Bradesco – ADR:
|
Brazil
|
|
|
Equity
|
|
4.1
|
0.7
|
Preference
Shares
|
|
1.5
|
2.7
|
Grupo
Financiero Banorte
|
Mexico
|
5.5
|
3.8
|
FEMSA
- ADR
|
Mexico
|
5.0
|
3.7
|
B3
|
Brazil
|
4.9
|
2.5
|
AmBev
– ADR
|
Brazil
|
4.2
|
2.2
|
Grupo
Aeroportuario del Pacifico – ADS
|
Mexico
|
3.7
|
1.1
|
Walmart de México
y Centroamérica
|
Mexico
|
3.4
|
3.5
|
Hapvida
Participacoes
|
Brazil
|
3.3
|
0.9
|
|
|
|
|
|
|
|
|
|
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.