BlackRock Latin Am Portfolio Update
June 22 2022 - 8:08AM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 31 May 2022.
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 2022 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ 5.4 9.9 10.1 -3.6 16.2
Share price 7.0 16.7 22.4 11.2 32.9
MSCI EM Latin America 7.8 13.3 17.1 5.1 20.7
(Net Return)^^
US Dollars:
Net asset value^ 5.8 3.2 -2.2 -3.6 13.4
Share price 7.4 9.6 8.8 11.2 29.6
MSCI EM Latin America 8.2 6.4 3.8 5.1 17.8
(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: 430.92p
Net asset value - including income: 444.44p
Share price: 434.00p
Total assets#: £144.9m
Discount (share price to cum income NAV): 2.4%
Average discount* over the month - cum income: 4.4%
Net gearing at month end**: 10.2%
Gearing range (as a % of net assets): 0-25%
Net yield##: 5.2%
Ordinary shares in issue(excluding 2,181,662 shares held in treasury): 29,448,641
Ongoing charges***: 1.1%
#Total assets include current year revenue.
##The yield of 5.2% is calculated based on total dividends declared in the last
12 months as at the date of this announcement as set out below (totalling 28.35
cents per share) and using a share price of 546.94 US cents per share
(equivalent to the sterling price of 434.00 pence per share translated in to US
cents at the rate prevailing at 31 May 2022 of $1.2602 US Dollars to £1.00).
2021 Q2 interim dividend of 7.82 cents per share (paid on 6 August 2021).
2021 Q3 interim dividend of 6.56 cents per share (paid on 8 November 2021).
2021 Q4 Final dividend of 6.21 cents per share (paid on 08 February 2022).
2022 Q1 Interim dividend of 7.76 cents per share (paid on 16 May 2022).
*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.
*** Calculated as a percentage of average net assets and using expenses,
excluding interest costs for the year ended 31 December 2021.
Geographic Exposure % of Total % of Equity MSCI EM Latin
Assets Portfolio * America Index
Brazil 62.6 62.9 62.7
Mexico 25.7 25.8 25.8
Chile 5.7 5.7 6.2
Argentina 2.0 2.0 0.0
Peru 1.9 2.0 2.7
Panama 1.6 1.6 0.0
Colombia 0.0 0.0 2.6
Net current assets (inc. 0.5 0.0 0.0
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 10.7% of the Company's net asset value.
Sector % of Equity Portfolio % of Benchmark*
*
Financials 27.3 24.8
Materials 22.0 24.3
Consumer Staples 13.4 14.0
Industrials 8.9 6.5
Energy 7.6 12.2
Communication Services 5.7 7.8
Real Estate 4.2 0.5
Health Care 4.2 2.0
Consumer Discretionary 3.8 3.1
Information Technology 2.0 0.5
Utilities 0.9 4.3
----- -----
Total 100.0 100.0
===== =====
*excluding net current assets & fixed interest
Country % of % of
Company of Risk Equity Benchmark
Portfolio
Vale - ADS Brazil 8.7 12.2
Petrobrás - ADR: Brazil
Equity 4.3 4.3
Preference Shares 3.3 4.9
Banco Bradesco - ADR Brazil 6.6 4.7
Itaú Unibanco - ADR Brazil 5.9 4.4
Grupo Financiero Banorte Mexico 4.2 2.7
B3 Brazil 4.2 2.7
Walmart de México y Centroamérica Mexico 4.1 3.1
FEMSA - ADR Mexico 3.9 2.4
AmBev - ADR Brazil 3.7 2.3
Gerdau - Preference Shares Brazil 3.4 1.1
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment
Manager noted;
For the month of May 2022, the Company's NAV returned 5.4%1, with the share
price moving 7.0%1. The Company's benchmark, the MSCI EM Latin America Index,
returned 7.8%1 on a net basis (all performance figures are in sterling terms
with dividends reinvested).
Latin American (LatAm) equities posted a positive performance over the month
with Chile and Colombia leading the rise.
Security selection in Peru contributed the most to relative performance over
the period while security selection in Brazil detracted most from relative
returns. An absence in the portfolio of the Brazilian electric engineering
company, Weg, was the top contributor to performance during the month; our view
remains that the stock is expensive and rising input costs are likely to weigh
on near term profits. An overweight position in Chilean pulp and paper company,
Empresas CMPC, also benefitted the portfolio as the company is performing well
on the back of current elevated pulp prices stemming from supply constraints.
On the other hand, the lack of any holding in Chilean chemical company,
Sociedad Quimica y Minera de Chile, detracted most from relative performance as
the company's main product, lithium, benefitted from the rising price
environment given strong expected demand from electronic vehicle producers. An
overweight position in Brazilian healthcare company, Hapvida, also detracted
from relative performance as the stock has been impacted this year following
COVID related spikes in healthcare costs which have been eating into the
company's profitability. We continue to have strong conviction in the stock
given the recent merger with Intermedica (another healthcare company). The
combined entity will have greater scale which should translate in to better
procurement terms in the future. As such, we have added to our position in the
stock as we see the name trading at attractive fundamentals following its
recent underperformance.
We reduced our exposure to Brazilian bank, Banco Bradesco, to take profits
following stock outperformance. We sold our holding in Brazilian food
processing company, Marfrig, as we see signs of the cattle cycle turning for
next few years leading to downside to margin expectations. The portfolio ended
the period being overweight to Brazil and Mexico, whilst being underweight to
Colombia and Peru. At the sector level, we are overweight financials and real
estate, and underweight energy and utilities.
Latin American equities are bouncing back from a challenging 2021 as investors
learn to live with the region's political risk and focus instead on soaring
local interest rates and commodity prices. LatAm currency remains relatively
cheap at current levels as the combination of rising interest rates and low
valuations has been attracting investors to increase regional exposure. Latin
American central banks were the first to raise rates last year and policy
makers in Mexico and Colombia have both surprised markets with steep hikes this
year in preparation for Federal Reserve tightening. Meanwhile, Brazilian policy
makers have increased borrowing costs to the highest levels in almost five
years. Latin America has been proactive in hiking rates and is considered to be
ahead of the curve from a monetary policy standpoint relative to developed
markets. Having been one of the worst performing Emerging Market currencies
last year, the Brazilian Real has shown robust appreciation this year with the
currency strengthening on the back of higher interest rates while rises in
commodity prices have certainly played a role. The prices of oil, soybeans and
iron ore (Brazil's main commodity exports) have increased since the start of
the year. What's more, high interest rates are making local assets more
attractive. Latin America's high yields compared with peers and relatively
cheap local stock markets continue to attract foreign account inflows. Global
rotation from growth stocks into value stocks continue to boost performance
Latin America and considering the Federal Reserve's pace of interest rate
rises, this may keep investors away from growth stocks for now. We would argue
that for many reasons LatAm would seem well-positioned ahead of rising
geopolitical tensions as the region provides: i) geographic and economic
insulation from the recent conflict; ii) long and wide commodities exposure;
iii) cheap currencies; iv) attractive valuation entry points; and v) proactive
monetary policy stances.
1Source: BlackRock, as of 31 May 2022.
22 June 2022
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.
END
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