The
information contained in this release was correct as at
31 May 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 May 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^
|
-4.4
|
-7.4
|
3.1
|
18.4
|
3.7
|
Share
price
|
-3.2
|
-5.4
|
5.1
|
19.2
|
8.3
|
MSCI
EM Latin America
(Net
Return)^^
|
-4.7
|
-6.2
|
9.6
|
25.6
|
12.7
|
US
Dollars:
|
|
|
|
|
|
Net
asset value^
|
-2.8
|
-6.8
|
5.8
|
6.3
|
4.9
|
Share
price
|
-1.5
|
-4.8
|
7.9
|
7.1
|
9.4
|
MSCI
EM Latin America
(Net
Return)^^
|
-3.1
|
-5.6
|
12.6
|
12.5
|
13.8
|
^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:
|
419.48p
|
Net
asset value - including income:
|
422.39p
|
Share
price:
|
368.00p
|
Total
assets#:
|
£137.2m
|
Discount (share
price to cum income NAV):
|
12.9%
|
Average discount*
over the month – cum income:
|
13.4%
|
Net
Gearing at month end**:
|
11.0%
|
Gearing range (as
a % of net assets):
|
0-25%
|
Net
yield##:
|
6.4%
|
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 6.4% is calculated based on total dividends declared in
the last 12 months as at the date of this announcement as set out
below (totalling 30.00 cents per
share) and using a share price of 468.54 US cents per share
(equivalent to the sterling price of 368.00
pence per share translated in to US cents at the rate
prevailing at 31 May 2024 of
$1.273 dollars to £1.00).
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)
2023
Q4 Interim dividend of 8.05 cents per
share (Paid on 09 February
2024)
2024
Q1 Interim dividend of 7.39 cents per
share (Paid on 13 May
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
|
58.2
|
57.8
|
57.4
|
Mexico
|
30.8
|
30.6
|
30.9
|
Chile
|
4.0
|
4.0
|
6.0
|
Colombia
|
2.6
|
2.6
|
1.4
|
Multi-Country
|
1.9
|
1.8
|
0.0
|
Argentina
|
1.8
|
1.8
|
0.0
|
Panama
|
1.4
|
1.4
|
0.0
|
Peru
|
0.0
|
0.0
|
4.3
|
Net
current Liabilities (inc. fixed interest)
|
-0.7
|
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 10.3% of the Company’s net
asset value.
Sector
|
% of Equity Portfolio*
|
% of Benchmark*
|
Financials
|
24.7
|
25.6
|
Consumer
Staples
|
18.1
|
15.9
|
Industrials
|
14.1
|
10.5
|
Materials
|
13.9
|
18.6
|
Consumer
Discretionary
|
10.4
|
1.8
|
Energy
|
10.0
|
13.6
|
Health
Care
|
4.1
|
1.5
|
Real
Estate
|
2.7
|
1.2
|
Information
Technology
|
1.8
|
0.6
|
Communication
Services
|
0.2
|
4.2
|
Utilites
|
0.0
|
6.5
|
|
-----
|
-----
|
Total
|
100.0
|
100.0
|
|
=====
|
=====
|
|
|
|
*excluding
net
current assets & fixed interest
Company
|
Country of Risk
|
% of
Equity Portfolio
|
% of
Benchmark
|
Petrobrás:
|
Brazil
|
|
|
Equity
|
|
2.0
|
|
Equity
ADR
|
|
5.6
|
4.9
|
Preference Shares
ADR
|
|
2.4
|
6.0
|
Vale
– ADS
|
Brazil
|
7.5
|
7.0
|
Walmart de México
y Centroamérica
|
Mexico
|
5.8
|
3.3
|
Grupo
Financiero Banorte
|
Mexico
|
5.8
|
4.2
|
Banco
Bradesco:
|
Brazil
|
|
|
Equity
ADR
|
|
3.9
|
0.6
|
Preference
Shares
|
|
1.7
|
2.2
|
Grupo
Aeroportuario del Pacifico – ADS
|
Mexico
|
4.5
|
1.2
|
B3
|
Brazil
|
4.4
|
2.0
|
AmBev:
|
|
|
|
Equity
|
Brazil
|
0.7
|
|
Equity
ADR
|
Brazil
|
2.6
|
1.8
|
MAG
Silver Corp
|
Mexico
|
3.1
|
0.0
|
Itaú
Unibanco – ADR
|
Brazil
|
3.1
|
4.9
|
|
|
|
|
|
Commenting
on the markets, Sam Vecht and
Christoph Brinkmann, representing
the Investment Manager noted;
The
Company’s NAV fell -4.4% in May, outperforming the benchmark, MSCI
Emerging Markets Latin America Index, which returned -4.7% on a net
basis over the same period. All performance figures are in sterling
terms with dividends reinvested.1
Emerging Markets
posted flattish returns (+0.6%) in May, significantly
underperforming Developed Markets (+4.5%). Latin America (-3.1%) lagged all other regions
on the Federal Reserve (the Fed) re-pricing
overhang. Brazil was down -5.0% as
the country grappled with concerns around severe floods affecting
both inflation and fiscal stability. Mexico declined -2.5% amid pre-election
nervousness although the Mexican Peso remained stable. On the other
hand, Argentina, Colombia and Peru all posted positive returns. Rate cuts in
the latter two countries were particularly well
received.
At
the portfolio level, our exposure to precious metals stocks in
Mexico and Ecuador continue to be the key positive
contributors to performance. On the other hand, having no exposure
to Peru hurt performance over the
month. So did our stock picking in Chile.
From
a security lens, Mexican silver miner, Mag Silver, was the largest
contributor, for the third month in a row. The stock was supported
by an increase in silver prices, as the commodity continues to
rally despite a more hawkish Federal Reserve. An underweight
position to Brazilian oil and gas company, Petrobras, also helped
performance as the stock declined following news of the dismissal
of the company's CEO. An overweight position in Mexican airport
operator, Grupo Aeroportuario del Pacífico (GAPB), was another
contributor, for the second month in a row after delivering decent
traffic numbers. Our overweight position in Brazilian integrated
healthcare operator, Hapvida, also contributed positively to
performance. The stock rallied ahead of their Q1 earnings call
which confirmed robust earnings growth driven by new customer
additions and favourable industry trends.
On
the flipside, IRB, the Brazilian reinsurance company was the
biggest detractor for performance in May, reversing gains seen in
April. An overweight position in Brazilian Retailer, Lojas Renner,
was another detractor during the month as their latest earnings
report surprised to the downside. The company has struggled to stay
competitive against cheap foreign imports while sticky rate policy
continues to be a broader burden to Brazil's equity markets. Brazilian bank,
Bradesco, also impacted performance over the month on the back of a
deteriorating net interest income outlook.
We
made few changes to the portfolio in May. We exited Chilean pulp
and paper company, Empresas CMPC, on the back of relative
performance. Pulp prices went up on supply disruptions and we
believe the overall market should become more oversupplied going
forward. We added to our holding in Mexican bank, Banorte, on the
back of weakness going into the Mexican elections. We also
initiated a position in Mexican highway operator, Pinfra. This is a
well-run, conservative business that trades on low
multiples.
Brazil is the largest portfolio overweight as
of May end. Mexico is our second
largest overweight. On the other hand, we remain underweight in
Peru due to its political and
economic uncertainty. The second largest portfolio underweight is
Chile.
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. The outcome of the
presidential elections in early June has created a lot of
volatility for Mexican financial assets, with the peso depreciating
significantly. Investors are concerned that the landslide win of
president-elect Sheinbaum and the Morena party will result in
reduced checks and balances for the government and potentially
detrimental judicial reforms. We have visited Mexico in the week after the election to meet
with investors, business owners and political advisors. Our
conclusion from that trip is that we believe the government will
remain relatively pragmatic and fiscally prudent, as it has been
during AMLO’s term. We have therefore used the market correction to
add to certain positions.
In
light of this, we have been taking advantage of the recent weakness
to add to the country, as we believe the market reaction to the
election outcome is unwarranted.
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 around 290% 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. In addition, our view of a softer
US labor market and further disinflation seems to be playing out,
as evidenced by the recent rise in jobless claims and the
relatively benign May inflation data. As a result, the pressure
from higher rates in the US is easing.
1Source:
BlackRock, as of 31 May
2024.
21 June 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.