LONDON (Alliance News) - Aberdeen Latin American Income Fund Ltd on Wednesday said it was "cautiously optimistic" over the outlook for Latin American markets after outperfoming its benchmark in its financial year.
Aberdeen Latin American, which has an objective of generating a total return, with an above-average yield, by investing in Latin American securities, reported a net asset value total return of 46.2% for the year to the end of August, while the total return of its benchmark came in at 38.8% for the year ended August.
The company measures itself against a composite benchmark index weighted as to 60% MSCI EM Latin America 10/40 Index and 40% JP Morgan GBI-EM Global Diversified (Latin America Carve Out) both in sterling terms.
A year earlier, Aberdeen Latin American produced a negative net asset value total return of 36.8%.
Aberdeen Latin American said in the recently ended financial year, Latin American bonds and equity prices rallied, largely with the help of a sharp second-half rebound. For some markets, the company said positive political development "spurred optimism" while a recovery in oil and metal commodity prices and continued monetary easing from global central banks proved supportive to others.
The company said markets in both Brazil and Argentina were lifted by better political climates, noting "Brazil's stock and bond markets were the region's standout performers, lifted by hopes that a new leader could rejuvenate the ailing economy".
Meanwhile in Argentina "the pro-business Mauricio Macri won the presidential election, pledging to relax exchange controls and renegotiate with foreign creditors", Aberdeen Latin American said.
The company declared a full year dividend of 3.50p per share, down from 4.25p per share offered a year earlier.
"Latin American markets posted an impressive performance over the 12 months compared to the broader emerging markets. It is, however, premature to declare an all-clear looking ahead. Volatility is likely to persist with your manager urging caution ahead of several key events that could swing sentiment," the company said, signalling to the potential for the US Presidential election to hit Mexican markets.
Despite this, the company said it remains "cautiously optimistic over the region's outlook", with "demographics, especially a burgeoning middle class, continue to serve as the compelling growth engine that drives the possibilities for businesses in Latin America".
Shares in Aberdeen Latin American were up 0.9% at 73.00p on Wednesday morning.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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