ALAI.L Regulatory News (ALAI)

London, UK, 20 August 2021

Edison issues review on Aberdeen Latin American Income Fund (ALAI)

Aberdeen Latin American Income Fund's (ALAI) managers at Aberdeen Standard Investments (ASI) are encouraged by the prospects for Latin America. An economic recovery is underway and is spreading from the industrial to the service sectors as the COVID-19 vaccination programme in the region gains momentum. While inflationary pressures are building, the managers are hopeful that central banks' monetary policies will ensure that these are temporary; for example, in Brazil, interest rates have already been hiked four times this year. The managers say that the Latin American stock market is supported by a strong earnings recovery, helped by higher commodity prices and attractive valuations. Their optimism is reflected in ALAI's higher equity weighting, which now makes up around two-thirds of the fund.

ALAI's current 10.8% share price discount to cum-income NAV compares with the 12.0% to 13.5% range of average discounts over the last one, three and five years. There is scope for a higher valuation if investor sentiment towards Latin American equities improves, as over the last 12 months the discount narrowed to 3.1% (in March 2021), which was a five-year low. Despite lower levels of income, the company has continued to pay regular quarterly dividends, using revenue reserves when required; it currently yields 6.4%.

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