BlackRock Latin American Investment Trust Plc Portfolio Update
December 19 2023 - 12:38PM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 30 November 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 November 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^ 11.8 4.8 14.9 41.7 20.8
Share price 11.0 0.5 16.2 32.7 26.5
MSCI EM Latin America 9.3 6.2 10.6 44.8 24.2
(Net Return)^^
US Dollars:
Net asset value^ 16.6 4.7 22.2 34.4 20.0
Share price 15.8 0.4 23.6 25.9 25.6
MSCI EM Latin America 14.0 6.1 17.6 37.3 23.2
(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: 465.42p
Net asset value - including income: 471.67p
Share price: 398.00p
Total assets#: £143.9m
Discount (share price to cum income 15.6%
NAV):
Average discount* over the month - 15.8%
cum income:
Net Gearing at month end**: 2.1%
Gearing range (as a % of net 0-25%
assets):
Net yield##: 8.0%
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 8.0% is calculated based on total dividends declared in the last
12 months as at the date of this announcement as set out below (totalling 40.06
cents per share) and using a share price of 503.85 US cents per share
(equivalent to the sterling price of 398.00 pence per share translated in to US
cents at the rate prevailing at 30 November 2023 of $1.266 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 (Paid 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 59.1 59.9 62.5
Mexico 26.7 27.1 28.3
Chile 5.4 5.5 5.4
Argentina 3.3 3.3 0.0
Colombia 2.6 2.6 1.1
Panama 1.5 1.6 0.0
Peru 0.0 0.0 2.7
Net current Assets 1.4 0.0 0.0
(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 3.6% of the Company's net asset value.
Sector % of Equity Portfolio* % of Benchmark*
Financials 23.8 26.0
Consumer Staples 17.6 16.9
Materials 16.2 18.0
Industrials 11.7 9.7
Energy 10.4 13.3
Consumer Discretionary 9.8 2.0
Health Care 4.0 1.7
Real Estate 2.6 0.7
Communication Services 2.0 4.5
Information Technology 1.9 0.5
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 9.7 8.3
Petrobrás - ADR: Brazil
Equity 5.5 4.6
Preference 3.2 5.6
Shares
Banco Bradesco - Brazil
ADR:
Equity 4.6 0.8
Preference 1.7 2.9
Shares
B3 Brazil 5.2 2.6
FEMSA - ADR Mexico 5.0 4.0
Walmart de México y Mexico 4.8 3.3
Centroamérica
AmBev - ADR Brazil 4.4 2.1
Grupo Financiero Mexico 4.0 3.9
Banorte
Grupo Aeroportuario Mexico 3.7 1.0
del Pacifico - ADS
Itaú Unibanco - ADR Brazil 3.7 5.1
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
The Company's NAV was 11.8% in November, outperforming the benchmark, MSCI
Emerging Markets Latin America Index, which returned 9.3% on a net basis over
the same period. All performance figures are in sterling terms with dividends
reinvested.
Most Emerging Markets posted positive performance in November, and Latin America
was the standout region returning +14%. While all markets in the Latin American
index were positive in November, performance was mainly led by Brazil (+14.2%)
and Mexico (+15.5%), followed by Chile (+10.7%) and Colombia (+8.1%). Peru
underperformed the others returning +3.2%. Argentina had a very strong month,
returning +42.4%, following Javier Milei winning in the runoff vote that took
place on the 19th November 2023. Milei is expected to be more market friendly
and he promises radical reforms, which has been well received by markets as any
change from the status quo is considered positive.
At the portfolio level, stock selection in Brazil contributed the largest gains,
mainly recovering the underperformance in previous two months. Returns in Brazil
was mainly due to stock selection in financials and our overweight position in
the consumer discretionary sector. Additionally, our off-benchmark holdings in
Argentina performed well, and being underweight in Peru also helped on a
relative basis. On the other hand, stock selection in Chile and Mexico were the
main detractors.
Top contributors on an issuer level were Pagseguro, GAPB, Globant and Ez Tec.
Many of the names we hold in Brazil are rate sensitive domestic names, including
Pagseguro, a payments acquirer, and Ez Tec, a homebuilder. The two names rallied
strongly in response to the decline in interest rates both in Brazil as well as
globally in response to a benign inflation picture. Grupo Aeroportuario del
Pacífico (GAPB), a Mexican airport operator, rebounding from steep losses in
October as investors reassessed the potential impact of a change in fee
structure between the government and airport operators. Globant, an IT services
company based in Argentina whose customers are largely US-based companies
rallied alongside the Nasdaq 100.
Main detractors were Arezzo, SQM, Ambev and not holding any Grupo Carso and Itau
weighed on returns. Arezzo, a Brazilian footwear retailer underperformed the
strong rally in Brazilian consumer names. The company should benefit from lower
rates but has been underperforming due to potential tax changes that might
negatively impact margins in 2024. SQM, a lithium producer in Chile, has
continued to underperform on the back of declining lithium prices. The
Brazilian beverage company, Ambev also underperformed on the back of potential
changes in taxes in Brazil.
We trimmed a few names in Brazil following this rally including Vale, the iron
ore producer; Assai, a food retailer and MRV, a homebuilder. We switched part of
our holding in Pagseguro to Lojas Renner, a Brazilian retail store operator,
where we expect a positive turn in their credit book. We reduced our holdings in
FEMSA, a Mexican beverage retailer, and Ecopetrol, an oil producer in Colombia,
after both holdings had strong performances year to date.
The portfolio's largest overweight exposure is in Argentina, driven by two off
-benchmark holdings. Our second largest overweight position is in Colombia,
where we have stock-specific positions in the energy and financial sector. On
the other hand, we are underweight in Peru due to its political and economic
uncertainty. We remain optimistic about the outlook for Brazil and have been
selective in our positioning, with a preference for 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 are especially positive about the outlook for Brazil. We believe that the
combination of a benign outlook for inflation and a relatively prudent fiscal
policy by the government will enable the central bank to decrease interest rates
faster than market participants currently expect.
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. 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. We also note that the Mexican economy will be relatively more sensitive
to a potential slowdown in economic activity in the United States.
We continue to closely monitor the political and economic situation in
Argentina, after libertarian Javier Milei unexpectedly won the presidential
elections in November. Milei is facing a very difficult situation, with
inflation at 160% year-on-year, currency reserves depleted and multiple economic
imbalances. The country needs to go through a painful adjustment process and we
worry about the hardship that this inflicts on society. We are hopeful that
country comes out stronger after the adjustment process, but we have limited
exposure to the Argentinian economy for now.
1Source: BlackRock, as of 30 November 2023.
19 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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