The
information contained in this release was correct as at
31 January 2024.
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 January
2024 and
unaudited.
Performance
at month end with net income reinvested
|
One
month
%
|
Three
months
%
|
One
year
%
|
Three
years
%
|
Five
years
%
|
Sterling:
|
|
|
|
|
|
Net
asset value^
|
-7.2
|
11.2
|
12.4
|
37.6
|
7.1
|
Share
price
|
-7.6
|
15.1
|
12.4
|
33.1
|
16.6
|
MSCI
EM Latin America
(Net
Return)^^
|
-4.7
|
12.0
|
11.2
|
46.2
|
15.1
|
US
Dollars:
|
|
|
|
|
|
Net
asset value^
|
-7.3
|
16.7
|
16.2
|
27.7
|
3.7
|
Share
price
|
-7.7
|
20.8
|
16.2
|
23.4
|
12.9
|
MSCI
EM Latin America
(Net
Return)^^
|
-4.8
|
17.5
|
15.0
|
35.6
|
11.4
|
^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:
|
460.09p
|
Net
asset value - including income:
|
463.13p
|
Share
price:
|
407.00p
|
Total
assets#:
|
£143.5m
|
Discount (share
price to cum income NAV):
|
12.1%
|
Average discount*
over the month – cum income:
|
9.6%
|
Net
Gearing at month end**:
|
5.3%
|
Gearing range (as
a % of net assets):
|
0-25%
|
Net
yield##:
|
5.6%
|
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 5.6% is calculated based on total dividends declared in
the last 12 months as at the date of this announcement as set out
below (totalling 28.82 cents per
share) and using a share price of 518.29 US cents per share
(equivalent to the sterling price of 407.00
pence per share translated in to US cents at the rate
prevailing at 31 January 2024 of
$1.273 dollars to £1.00).
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)
2024
Q4 Interim dividend of 8.05 cents per
share (Paid on 09 February
2024).
*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 2023.
Geographic Exposure
|
% of Total Assets
|
% of Equity Portfolio *
|
MSCI EM Latin America Index
|
Brazil
|
58.8
|
58.7
|
60.6
|
Mexico
|
27.9
|
27.9
|
30.0
|
Chile
|
4.7
|
4.7
|
5.0
|
Argentina
|
2.9
|
2.9
|
0.0
|
Colombia
|
2.6
|
2.6
|
1.2
|
Panama
|
1.6
|
1.6
|
0.0
|
Multi-Country
|
1.6
|
1.6
|
0.0
|
Peru
|
0.0
|
0.0
|
3.2
|
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 5.2% of the Company’s net
asset value.
Sector
|
% of Equity Portfolio*
|
% of Benchmark*
|
Financials
|
21.8
|
26.0
|
Consumer
Staples
|
19.1
|
16.5
|
Materials
|
16.6
|
17.4
|
Industrials
|
11.0
|
10.0
|
Energy
|
10.9
|
14.0
|
Consumer
Discretionary
|
10.4
|
1.9
|
Health
Care
|
3.9
|
1.5
|
Real
Estate
|
2.7
|
1.2
|
Communication
Services
|
2.0
|
4.1
|
Information
Technology
|
1.6
|
0.5
|
Utilites
|
0.0
|
6.9
|
|
-----
|
-----
|
Total
|
100.0
|
100.0
|
|
=====
|
=====
|
|
|
|
*excluding
net
current assets & fixed interest
Company
|
Country of Risk
|
% of
Equity Portfolio
|
% of
Benchmark
|
Petrobrás:
|
Brazil
|
|
|
Equity
|
|
2.2
|
|
Equity
ADR
|
|
3.9
|
5.0
|
Preference Shares
ADR
|
|
3.5
|
6.1
|
Vale
– ADS
|
Brazil
|
9.0
|
7.3
|
Walmart de México
y Centroamérica
|
Mexico
|
6.1
|
3.4
|
Banco
Bradesco:
|
Brazil
|
|
|
Equity
ADR
|
|
4.2
|
0.7
|
Preference
Shares
|
|
1.6
|
2.6
|
FEMSA
- ADR
|
Mexico
|
4.7
|
4.2
|
B3
|
Brazil
|
4.2
|
2.4
|
AmBev:
|
|
|
|
Equity
|
Brazil
|
0.8
|
|
Equity
ADR
|
Brazil
|
3.3
|
4.7
|
Grupo
Aeroportuario del Pacifico – ADS
|
Mexico
|
3.8
|
1.0
|
Itaú
Unibanco – ADR
|
Brazil
|
3.7
|
5.1
|
Grupo
Financiero Banorte
|
Mexico
|
3.3
|
4.2
|
|
Commenting
on the markets, Sam Vecht and
Christoph Brinkmann, representing
the Investment Manager noted;
The
Company’s NAV fell -7.2% in January, underperforming the benchmark,
MSCI Emerging Markets Latin America Index, which declined -4.7% on
a net basis over the same period. All performance figures are in
sterling terms with dividends reinvested.
Latin America struggled in January, with all
markets down except Colombia
(+1.9%).
Chile was the weakest market as metals prices
declined and the pace of interest rate cuts was slower than
expected. This was similar across other Latin American countries
such as Brazil (MSCI Brazil
-5.9%). The key driver of markets during the month has been the
strong economic data in the US, which has pushed out expectations
of the first US rate cut. This has dampened the sentiment for
Emerging Markets, including Latin
America, and has been a significant headwind for our
positioning in rate-sensitive domestic stocks in the
region.
At
the portfolio level, our off-benchmark holding in an Ecuadorian
gold miner was the key contributor to performance, alongside our
position in Colombian Financials. On the other hand, stock
selection in the Consumer Discretionary space in Brazil was the biggest drag on performance.
Security selection within the Mexican Materials sector also hurt
returns.
From
a security lens, having no exposure to Brazilian car rental
company, Localiza, and Brazilian electric equipment firm, WEG, were
the two biggest contributors to relative returns. Both companies
declined due to anticipated operational challenges in their
specific segments. They were also affected by the overall downturn
in the Brazilian market, driven by expectations of rate cuts being
pushed out in the US. Overweight position in Soma, the Brazilian
fashion retailer was another contributor to performance as the
stock rose following news of a merger with Arezzo, a footwear
retailer in Brazil. Elsewhere,
Colombian exposure through bank, Bancolombia, also did
well.
On
the flipside, Chilean lithium producer, SQM, detracted. Lithium
prices continue to struggle due to oversupply, but we believe that
they have reached cash cost support levels, which should lead to
supply curtailments.
In
addition, SQM faced disruptions in its operations due to roadblocks
caused by local community protests, which have now been resolved.
Brazilian real estate developer, Ez Tec, was another detractor on
the back of weak operating results. An overweight position in truck
leasing company, Vamos, also weighed on returns over the
month.
Over
the course of January, we made few changes to the portfolio. We
rotated some of our Brazilian exposure by reducing our position in
digital payments company, Pagseuro, and adding to our holding in Ez
tec, based on relative performance. We also added to our holding in
Brazilian iron ore producer, Vale, as both the stock and iron ore
prices have come off. We are also positive on the company’s ability
to deliver decent results as seasonally higher volumes should help
on cost dilution. Elsewhere, we initiated a position in
Lundin Gold, a high-quality gold
mining company with operations in Ecuador as the stock trades on an attractive
free cash flow yield. In Mexico,
we took profits and reduced our holding in convenience store
operator, FEMSA, as our investment case has largely played
out.
Argentina continues to the be largest
portfolio overweight, driven by two off-benchmark holdings (with no
exposure to domestic Argentina).
Multi-Country appears as our second largest overweight, due to our
newly initiated holding in Lundin
Gold, a Canadian based mining company with operations in
Ecuador. On the other hand, we
remain underweight in Peru due to
its political and economic uncertainty. The second largest
portfolio underweight is Mexico.
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 fallen significantly across 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 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 central bank cutting the policy rate considerably. We
anticipate further reductions, particularly if the Federal Reserve
ceases its own rate hikes. The government’s fiscal framework being
more orthodox than market expectations has 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 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 above 200% year-on-year, FX reserves depleted and
multiple economic imbalances. To further gauge sentiment on the
ground, we travelled to the country in January. The trip further
instilled our cautious view on the economic outlook for the
country, and we see no fundamental reasons as to why we would want
to buy this market now.
We
acknowledge the strengths of the data in the United States, but we believe that,
ultimately, the domestic economic outlook in the Latin American
countries will be the key driver of local interest rates. We
therefore maintain conviction in the funds positioning in
rate-sensitive domestic stocks.
1Source:
BlackRock, as of 31 January
2024.
21 February 2024
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.