Last checked at 30 Dec 2021 14:26
BlackRock Frontiers Investment Trust Plc - Portfolio UpdateBlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, December 30
The information contained in this release was correct as at 30 November 2021. 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 FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 November 2021 and unaudited.
Performance at month end with net income reinvested.
| One month % | Three months % | One year % | Three years % | Five years % | Since Launch* % | |
| Sterling: | ||||||
| Share price | 1.2 | 4.4 | 22.6 | 6.7 | 21.4 | 91.0 |
| Net asset value | -1.2 | 3.9 | 25.8 | 17.5 | 33.5 | 110.3 |
| Benchmark (NR)** | -1.4 | 1.2 | 13.4 | 4.0 | 31.0 | 68.0 |
| MSCI Frontiers Index (NR) | -1.2 | 4.4 | 25.8 | 32.2 | 50.9 | 94.9 |
| MSCI Emerging Markets Index (NR) | -0.6 | -3.2 | 3.6 | 25.8 | 48.8 | 66.8 |
| US Dollars: | ||||||
| Share price | -2.4 | 0.4 | 21.5 | 10.7 | 28.7 | 62.8 |
| Net asset value | -4.6 | -0.2 | 24.6 | 21.9 | 41.5 | 78.9 |
| Benchmark (NR)** | -4.9 | -2.7 | 12.4 | 7.8 | 38.7 | 43.7 |
| MSCI Frontiers Index (NR) | -4.6 | 0.4 | 24.7 | 37.0 | 59.8 | 65.4 |
| MSCI Emerging Markets Index (NR) | -4.1 | -7.0 | 2.7 | 30.5 | 57.5 | 41.6 |
Source: BlackRock
* 17 December 2010.
** The Company’s benchmark changed from MSCI Frontier Markets Index to MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (net total return, USD) effective 1/4/2018.
| At month end | |
| US Dollar | |
| Net asset value - capital only: | 180.32c |
| Net asset value - cum income: | 185.89c |
| Sterling: | |
| Net asset value - capital only: | 136.31p |
| Net asset value - cum income: | 140.52p |
| Share price: | 130.00p |
| Total assets (including income): | £266.0m |
| Discount to cum-income NAV: | 7.5% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.2% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| Ongoing charges plus taxation and performance fee: | 2.4% |
\* The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.2% and includes the 2020 final dividend of 4.25 cents per share declared on 11 December 2020 which paid on 12 February 2021. Also included is the 2021 interim dividend of 2.75 cents per share, announced on 01 June 2021 and paid to shareholders on 25 June 2021.
** Excluding 52,497,053 ordinary shares held in treasury.
***Calculated as a percentage of average net assets and using expenses, excluding Performance fees and interest costs for the year ended 30 September 2021.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 37.7 | Saudi Arabia | 16.5 | |
| Consumer Discretionary | 17.7 | Indonesia | 13.0 | |
| Industrials | 15.8 | Vietnam | 8.9 | |
| Materials | 8.3 | Thailand | 7.7 | |
| Consumer Staples | 6.3 | Greece | 7.2 | |
| Information Technology | 5.1 | United Arab Emirates | 6.6 | |
| Energy | 4.4 | Kazakhstan | 5.9 | |
| Real Estate | 4.2 | Egypt | 5.7 | |
| Health Care | 4.0 | Philippines | 5.6 | |
| Utilities | 1.5 | Malaysia | 5.2 | |
| Communication Services | 1.3 | Chile | 4.3 | |
| ----- | Hungary | 4.1 | ||
| 106.3 | Poland | 3.7 | ||
| ----- | Qatar | 2.8 | ||
| Short positions | -0.4 | Peru | 2.1 | |
| ===== | Kenya | 2.0 | ||
| Romania | 1.8 | |||
| Pakistan | 1.5 | |||
| Panama | 1.3 | |||
| Nigeria | 0.4 | |||
| ----- | ||||
| Total | 106.3 | |||
| ----- | ||||
| Short positions | -0.4 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.12 2020 % | 31.01 2021 % | 28.02 2021 % | 31.03 2021 % | 30.04 2021 % | 31.05 2021 % | 30.06 2021 % | 31.07 2021 % | 31.08 2021 % | 30.09 2021 % | 31.10 2021 % | 30.11 2021 % | |
| Long | 107.9 | 110.5 | 114.0 | 105.7 | 108.5 | 105.3 | 106.8 | 107.1 | 104.2 | 108.1 | 110.6 | 106.3 |
| Short | 1.1 | 1.1 | 4.5 | 3.4 | 2.5 | 2.3 | 4.6 | 2.3 | 0.6 | 0.4 | 0.4 | 0.4 |
| Gross | 109.0 | 111.6 | 118.5 | 109.1 | 111.0 | 107.6 | 111.4 | 109.4 | 104.8 | 108.5 | 111.0 | 106.7 |
| Net | 106.8 | 109.4 | 109.5 | 102.3 | 106.0 | 103.0 | 102.2 | 104.8 | 103.6 | 107.7 | 110.2 | 105.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 4.7 |
| Bank Rakyat | Indonesia | 4.0 |
| Mobile World | Vietnam | 3.5 |
| FPT | Vietnam | 3.3 |
| JSC Kaspi | Kazakhstan | 3.1 |
| Emaar Properties | United Arab Emirates | 3.1 |
| Saudi British Bank | Saudi Arabia | 3.0 |
| United International Transport | Saudi Arabia | 2.9 |
| OTP Bank | Hungary | 2.8 |
| CP All | Thailand | 2.5 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company’s NAV returned -4.6% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which returned -4.9% in November. For reference, the MSCI Emerging Markets Index ended the month -4.1% and the MSCI Frontier Markets Index -4.6% over the same period (all performance figures are on a US Dollar basis with net income reinvested).
Emerging and Frontier markets pulled back in November, underperforming developed markets (-2.2%). Market sentiment deteriorated as investors feared earlier than anticipated Fed tightening, coupled with concerns of ramping inflation and slowing growth on reopening worries on the new Omicron Covid-19 variant. Our benchmark is still outperforming Emerging Markets considerably year to 30 November 2021 (+7.7% v -4.3%).
In terms of the market implication of the Omicron Covid-19 variant we think it’s about as transmissible as the Delta variant and are closely watching the evidence as to how much protection is provided by previous infection and vaccines. While data is limited what we see so far is encouraging. We do expect more widespread mobility restrictions to come into force given the numbers involved and the transmissibility of the new variant with cases rising rapidly. As we move through Omicron news flow we still expect the reacceleration in economic activity in those countries which were further behind, such as Indonesia, Thailand, Philippines.
Argentina (-16.5%), Turkey (-13.4%) and Poland (-11.7%) declined sharply in November. Oil price declines also weighed on several our markets. UAE (+7.7%), Chile (+6.0%) and Philippines (+2.6%) were the best performing.
Our long position in Egypt was the largest contributor to returns over the month driven by financial EFG Hermes (+16.0%) and tobacco company Eastern Company (+10.6%). Our positioning in Vietnam also helped returns, namely electronics and groceries retailer Mobile World (+7.3%). Our long in UAE property developed EMAAR was an additional contributor, benefiting from a substantial pick up in demand for property and earnings beat. We trimmed on strong performance.
Positioning in ASEAN countries Indonesia, Thailand and Malaysia were the primary detractors from performance in November as fears of the Omicron Covid-19 variant was a setback for these countries which were behind from a vaccination and economic normalization point of view and more sensitive to the potential of renewed lockdowns and mobility restrictions. Both Indonesian retailer MAPI (-16.8%) and casino operator Genting Malaysia (-16.5%) were top detractors. Hungarian energy company Mol (-13.1%) was an additional detractor.
We made a few changes to the portfolio in November, in particular continuing to add to south-east Asia which we believe has lagged the post COVID market recovery that we have seen globally and was weighed down in November by renewed Omicron covid variant concerns. We added Filipino fast food restaurant chain Jollibee and resort company Bloomberry Resorts for leverage into the reopening. We also moved around some positioning in Thailand which we believe will eventually be a beneficiary of tourism reopening. We added financial Kasikornbank and Airport operator Airports of Thailand. We sold energy holdings PTT and IRPC.
We visited Egypt this month which affirmed our view that longer term, we think the country is on the right track while the equity market is very cheap. The huge increase in domestic gas production which has moved Egypt to being self sufficient has significantly improved stability in the current account balance. Although, risks remain given the twin fiscal and current account deficits, these risks are well understood and pressure should ease as tourism continues to rebound through 2022.
In Turkey the currency is down 50% since our investment trip. The equity market is up 25% in local currency terms while doing very badly in dollar terms. The shift by the central bank away from orthodox economic policy, with real rates running at substantially negative levels has led to significant capital flight away from the Lira. We currently have no exposure to the market and would need to see a significant, long-lasting change in economic policy direction to consider the market interesting.
We also took a fresh look at Argentina where we maintain no weight in the portfolio. Whilst the opposition gained considerable ground in the mid-term elections, we consider the considerable debt load and fiscal deficit as presenting an almost insurmountable funding challenge whether or not an IMF package is eventually agreed.
Overall, for countries that have stable macro environments and have made timely progress in vaccination rollouts, we believe the global macro recovery provides a favourable backdrop to recover lost economic productivity. Valuations in a lot of the frontier end emerging markets remain attractive relative to their own history and also relative to the more evolved markets. We believe our opportunity set is a compelling universe to generate alpha.
Sources:
1BlackRock as at 30 November 2021
2MSCI as at 30 November 2021
30 December 2021
ENDS
Latest information is available by typing www.blackrock.com/uk/brfi 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 BlackRock’s website (or any other website) is incorporated into, or forms part of, this announcement.