Last checked at 16 Nov 2016 15:00
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC - Portfolio UpdateBLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC - Portfolio Update
PR Newswire
London, November 16
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLCAll information is at 31 October 2016 and unaudited.
Performance at month end with net income reinvested.
| One month % | Three months % | One year % | Three years % | Five years % | ^^Since 31.03.06 % | |
| Sterling: | ||||||
| Net asset value^ | 16.1 | 19.2 | 66.0 | 10.6 | 2.2 | 89.8 |
| Share price | 14.0 | 19.9 | 56.8 | 8.8 | -4.6 | 75.1 |
| MSCI EM Latin America | 17.0 | 19.4 | 69.1 | 8.8 | 2.6 | 105.7 |
| US Dollars: | ||||||
| Net asset value^ | 9.1 | 9.5 | 31.2 | -16.0 | -22.6 | 33.8 |
| Share price | 7.2 | 10.1 | 23.9 | -17.4 | -27.8 | 23.4 |
| MSCI EM Latin America | 10.0 | 9.8 | 33.7 | -17.3 | -22.4 | 44.8 |
^cum income
^^Date which BlackRock took over the investment management of the Company.
Sources: BlackRock, Standard & Poor’s Micropal^
| At month end | |
| Net asset value – capital only: | 514.83p |
| Net asset value – cum income: | 523.02p |
| Share price: | 450.75p |
| Total Assets#: | £213.5m |
| Discount (share price to cum income NAV): | 13.8% |
| Average discount* over the month – cum income: | 14.7% |
| Net gearing at month end**: | 3.6% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 2.0% |
| Ordinary shares in issue***: | 39,369,620 |
| Ongoing charges****: | 1.1% |
#Total assets include current year revenue.## calculated using total dividends declared in the last 12 months as at the date of this announcement as a percentage of month end share price.\* 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.***Excluding 2,071,662 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 31 December 2015.
Geographic Exposure
| % of Total Assets | % of Equity Portfolio * | MSCI EM Latin American Index | |
| Brazil | 63.8 | 63.9 | 58.7 |
| Mexico | 24.9 | 25.0 | 27.0 |
| Peru | 5.7 | 5.6 | 2.6 |
| Argentina | 2.9 | 2.9 | 0.0 |
| Chile | 1.5 | 1.5 | 8.6 |
| Colombia | 1.1 | 1.1 | 3.1 |
| Net current assets (inc.Fixed interest) | 0.1 | 0.0 | 0.0 |
| ----- | ----- | ----- | |
| Total | 100.0 | 100.0 | 100.0 |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 31.2 | 30.5 |
| Consumer Staples | 22.3 | 18.9 |
| Energy | 13.5 | 9.6 |
| Materials | 11.8 | 13.3 |
| Industrials | 6.0 | 6.1 |
| Information Technology | 4.3 | 2.0 |
| Consumer Discretionary | 3.6 | 6.2 |
| Utilities | 3.1 | 6.0 |
| Telecommunication Services | 2.9 | 5.5 |
| Real Estate | 1.3 | 1.5 |
| Health Care | 0.0 | 0.4 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current assets & fixed interest
Ten Largest Equity Investments (in percentage order)
| Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Petrobras | Brazil | 10.1 | 6.8 |
| Itau Unibanco | Brazil | 10.1 | 6.7 |
| Banco Bradesco | Brazil | 8.5 | 6.5 |
| AmBev | Brazil | 5.7 | 4.8 |
| Femsa | Mexico | 4.2 | 3.0 |
| Cielo | Brazil | 3.4 | 1.8 |
| Grupo Financiero Banorte | Mexico | 3.3 | 2.5 |
| BM&F Bovespa | Brazil | 3.2 | 1.8 |
| BRF | Brazil | 3.1 | 1.8 |
| Cemex SAB | Mexico | 3.0 | 2.1 |
Commenting on the markets, Will Landers, representing the Investment Manager noted;
Performance
For the month of October 2016, the Company’s NAV rose by 16.1% and the share price rose by 14.0%, whilst the Company’s benchmark, the MSCI EM Latin America Index, rose by 17.0% (all in sterling terms).
An underweight position in Colombia was the largest contributor to returns after the market reacted negatively to the defeat of the peace referendum and weaker oil. An overweight to Brazil also added to performance. The largest contributor to performance was an above index weighting in Petrobras. The stock benefited from the announcement of a new fuel pricing policy in Brazil, which will be based on international parity. Petrobras also cut gasoline and diesel prices during the month. A lack of exposure to Televisa also contributed positively to relative performance.
Stock selection in Brazil was the largest detractor from returns together with an above benchmark position in Peru and exposure to Argentina which has a nil benchmark weighting. In Peru, the market appears to be unconvinced about the new economic policy. An underweight position in Vale weighed on returns as the stock performed well as a result of strength in iron ore prices over the second half of the month. A lack of exposure to Banco do Brasil also detracted from performance.
Transactions/Gearing
During the month we added to Mexican gas pipeline and utilities operator Ienova via a secondary offering given attractive valuation levels and an interesting pipeline of new projects being auctioned. We funded the move by trimming some of the stronger performing large cap stocks such as Petrobras and Itau Unibanco. We added to Vale given our increased confidence of higher iron ore prices in upcoming quarters, aided by positive news from China. In addition, we introduced Bradespar, Vale’s holding company, which was trading at a higher discount to its NAV than the historical average. We introduced Mercadolibre to the portfolio as the company continues to develop the leading online retail platform in the region.
Net gearing was approximately 3.6% at the end of October.
Positioning
We continue to be encouraged by the direction of the new Temer administration in Brazil. Reforms are moving forward in Congress. The president seems to be enjoying a healthy dialogue with the legislative branch. The Brazilian Central Bank began what should be a long-lived easing cycle in the past month. Finally, our checks with corporations in Brazil point to greater confidence regarding results in 2017. In contrast, our underweight in Mexico reflects short-term concerns with the impact of US elections on trade and FX. In addition, we feel valuation levels don’t take into consideration Mexico’s own political questions regarding the next presidential cycle and headwinds to economic growth from the budgetary cuts stemming from lower tax revenue generation. In the Andean region, we continue to favour Peru and its expected growth pick-up from the Kuczynski-led government over Chile and Colombia. In Chile the president is still chasing populism while Colombia is dealing with the issues surrounding the failed peace vote.
16 November 2016
ENDS
Latest information is available by typing www.blackrock.co.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.