BlackRock Latin American Investment Trust Plc Portfolio Update
December 04 2023 - 12:08PM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 31 October 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 October 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^ -7.0 -13.4 -1.6 54.0 6.4
Share price -8.3 -16.3 -2.3 43.6 11.1
MSCI EM Latin America -4.2 -8.5 -1.6 56.4 11.3
(Net Return)^^
US Dollars:
Net asset value^ -7.6 -18.3 3.7 44.5 1.1
Share price -8.9 -21.0 3.0 34.8 5.6
MSCI EM Latin America -4.8 -13.7 3.7 46.8 5.7
(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: 419.88p
Net asset value - including income: 422.02p
Share price: 358.50p
Total assets#: £133.3m
Discount (share price to cum income 15.1%
NAV):
Average discount* over the month - 14.5%
cum income:
Net Gearing at month end**: 7.5%
Gearing range (as a % of net 0-25%
assets):
Net yield##: 9.2%
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 9.2% 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 435.02 US cents per share
(equivalent to the sterling price of 358.50 pence per share translated in to US
cents at the rate prevailing at 31 October 2023 of $1.213 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 November 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 59.3 59.2 62.4
Mexico 26.9 26.9 27.9
Chile 5.7 5.7 5.5
Colombia 3.5 3.4 1.2
Argentina 3.3 3.3 0.0
Panama 1.5 1.5 0.0
Peru 0.0 0.0 3.0
Net current -0.2 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 7.2% of the Company's net asset value.
Sector % of Equity Portfolio* % of Benchmark*
Financials 22.8 25.2
Consumer Staples 18.9 16.9
Materials 16.1 18.4
Energy 11.8 14.3
Industrials 11.1 9.5
Consumer Discretionary 9.1 1.8
Health Care 3.6 1.6
Real Estate 2.7 0.8
Communication Services 2.0 4.4
Information Technology 1.9 0.4
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 10.1 8.6
Petrobrás - ADR: Brazil
Equity 5.9 5.1
Preference 3.4 6.0
Shares
FEMSA - ADR Mexico 5.9 4.0
Banco Bradesco - Brazil
ADR:
Equity 4.3 0.7
Preference 1.6 2.7
Shares
Walmart de México y Mexico 4.9 3.4
Centroamérica
B3 Brazil 4.7 2.4
AmBev - ADR Brazil 4.4 2.2
Grupo Financiero Mexico 3.9 3.9
Banorte
Itaú Unibanco - ADR Brazil 3.4 4.7
Grupo Aeroportuario Mexico 3.0 0.8
del Pacifico - ADS
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
The Company's NAV was down by 7.0% in October, underperforming the benchmark,
MSCI Emerging Markets Latin America Index, which returned -4.2% on a net basis
over the same period. All performance figures are in sterling terms with
dividends reinvested.
During October, Latin America performed poorly with all regional markets losing
ground. Chile (-9.1%) fell most but Mexico (-6.2%) and Brazil (-3.7%) also
fell. Brazil's equity market was negatively impacted by rising US interest
rates which put pressure on the Brazilian currency.
On the political front, Argentina had the first rounds of a general election
where the market was surprised by the victory of Sergio Massa, the current
finance minister. Massa and Javier Milei, who was expected to take first place,
will go to a runoff vote in late November. In Colombia, regional elections took
place, where the opposition party won in the main cities.
In October, our Colombian holdings added value, driven mainly by our holding in
Ecopetrol. Alternatively, Brazil detracted, as our holdings in the consumer
discretionary and financial sectors continued to sell-off. Hapvida, a health
care operator, Vamos, a truck leasing company, EZ Tec, a real estate developer
and MRV, a homebuilder, were amongst the top five detractors to performance in
October. Elsewhere in Brazil materials company, Vale, reported good third
quarter results following strong iron ore pricing.
The main negative contributor to the portfolio performance during the period
from an issuer level was Grupo Aeroportuario del Pacifico (GAPB), a Mexican
airport operator. The entire Mexican airport sector declined after the
announcement of regulatory changes, which implied lower profit margins for the
sector. However, we believe that the market reaction was overdone and that the
impact may be less severe than initially anticipated. We added to GAPB, to
maintain our position weight post the sell-off.
In Brazil, we trimmed our position in Assai, while we added to our holding in EZ
Tec. We also added to Chilean lithium miner, SQM, following some weakness in the
share price. In Mexico we added to Wal Mart Mexico and FEMSA as we like the
defensive quality of these businesses, while we reduced our position in Banorte
following strong relative performance.
Our largest overweight exposure is to Argentina, driven by two off-benchmark
holdings. Our second largest overweight position is in Colombia via our stock
specific positions in the energy and financial sector. On the other hand, we are
underweight to Peru, due to its political and economic uncertainty. We remain
positive on the outlook for Brazil and have been selective in our positioning
with preference to domestic businesses that will benefit more from further rate
cuts.
Outlook
We remain optimistic about the outlook for Latin America. Central banks have
been proactive in increasing interest rates to help control inflation, which has
now started to fall across most countries in the region. As such we have started
to see central banks beginning to lower interest rates, which should support
both economic activity and asset prices. In addition, the whole region is
benefitting from being relatively isolated from global geopolitical conflicts.
We believe that this will lead to an increase in foreign direct investment.
Brazil is the showcase of this thesis - with the central bank cutting the policy
rate by another 50bps in October (100bps in total cut in previous two months).
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 back into the market.
We remain positive on the outlook for the Mexican economy as it is a key
beneficiary of the friend-shoring of global supply chains, though we have
reduced our overweight, 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.
1Source: BlackRock, as of 31 October 2023.
4 December 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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