Last checked at 30 Oct 2019 14:24
BlackRock Latin American Investment Trust Plc - Portfolio UpdateBlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, October 30
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)All information is at 30 September 2019 and unaudited.Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | 1.1 | -8.3 | 13.5 | 26.8 | 25.1 |
| Share price | 3.1 | -9.8 | 19.6 | 29.7 | 25.3 |
| MSCI EM Latin America (Net Return)^^ | 1.4 | -2.5 | 12.9 | 28.4 | 26.5 |
| US Dollars: | |||||
| Net asset value^ | 2.3 | -11.2 | 7.2 | 20.2 | -5.0 |
| Share price | 4.4 | -12.7 | 12.9 | 22.9 | -4.9 |
| MSCI EM Latin America (Net Return)^^ | 2.6 | -5.6 | 6.7 | 21.8 | -3.9 |
^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: | 518.26p |
| Net asset value – cum income: | 521.23p |
| Share price: | 461.00p |
| Total Assets#: | £223.3m |
| Discount (share price to cum income NAV): | 11.6% |
| Average discount* over the month – cum income: | 11.6% |
| Net gearing at month end**: | 11.1% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 5.8% |
| Ordinary shares in issue (excluding 2,181,662 shares held in treasury): | 39,259,620 |
| Ongoing charges***: | 1.0% |
#Total assets include current year revenue.
##The yield of 6.0% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 33.87 cents per share) and using a share price of 568.08 US cents per share (equivalent to the sterling price of 461.00 pence per share translated in to US cents at the rate prevailing at 30 September 2019 of $1.2323 dollars to £1.00).
2018 Q4 interim dividend of 8.13 cents per share (paid on 8 February 2019)
2019 Q1 interim dividend of 8.56 cents per share (paid on 17 May 2019)
2019 Q2 interim dividend of 9.15 cents per share (paid on 16 August 2019)
2019 Q3 interim dividend of 8.03 cents per share (ex-date 10 October and payable on 08 November 2019)
\* 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 2018.
| Geographic Exposure | % of Total Assets^ | % of Equity Portfolio * | MSCI EM Latin America Index | |
| Brazil | 65.5 | 64.4 | 63.0 | |
| Mexico | 26.1 | 25.7 | 20.9 | |
| Argentina | 4.5 | 4.4 | 1.5 | |
| Colombia | 2.4 | 2.3 | 3.4 | |
| Chile | 2.0 | 2.2 | 8.0 | |
| Panama | 1.2 | 1.2 | 0.0 | |
| Peru | 0.0 | 0.0 | 3.2 | |
| Net current liabilities (inc. fixed interest) | -1.7 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| 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 9.1% of the Company’s net asset value.
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 26.6 | 33.2 |
| Consumer Staples | 16.0 | 15.9 |
| Energy | 13.3 | 10.1 |
| Materials | 10.4 | 12.9 |
| Industrials | 9.9 | 6.5 |
| Utilities | 6.3 | 5.9 |
| Real Estate | 4.7 | 1.4 |
| Communication Services | 4.5 | 6.4 |
| Consumer Discretionary | 4.3 | 5.6 |
| Health Care | 2.9 | 1.2 |
| Information Technology | 1.1 | 0.9 |
| ----- | ----- | |
| 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 | 9.6 | 7.7 |
| Itau Unibanco | Brazil | 7.4 | 6.3 |
| Banco Bradesco | Brazil | 5.6 | 6.5 |
| AmBev | Brazil | 4.9 | 3.4 |
| Grupo Financiero Banorte | Mexico | 4.0 | 2.2 |
| FEMSA | Mexico | 4.0 | 2.8 |
| America Movil | Mexico | 3.9 | 3.9 |
| Banco do Brasil | Brazil | 3.9 | 1.5 |
| Walmart de Mexico y Centroamerica | Mexico | 3.6 | 2.4 |
| Rumo Logística Operadora Multimodal | Brazil | 3.2 | 1.0 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of September 2019, the Company’s NAV returned +1.1%1 with the share price moving +3.1%1. The Company’s benchmark, the MSCI EM Latin America Index, was up +1.4%1 (net basis) (all performance figures are in sterling terms with dividends reinvested).
Brazilian selection was the largest detractor over the month. An overweight to consumer staples name, CBD, weighed on relative returns following the release of poor second quarter results for 2019, driven by their multi-retail segment which was negatively impacted by a generally weak economic backdrop. Not holding food producer, JBS, also detracted from performance during the month. The company benefitted from the severity in which African Swine Fever has impacted hog supply globally. This resulted in strong second quarter results on positive pricing momentum, while JBS also benefitted from continued deleveraging. Telecom name, Oi, continues to weigh on relative returns as reform momentum slows. On the other hand, stock specifics helped offset underperformance. Despite weaker oil over the month, overweight positions in Petrobras and Ecopetrol performed well. Petrobras rallied after the “Transfer of Rights” agreement passed through the senate, while Ecopetrol’s gains came off the government’s announcement of a fracking pilot program. Rail operator, Rumo, also contributed to relative returns in September.
Over the month, Mexico notably became the Company’s largest country overweight after we initiated a position in Walmart de Mexico. We believe the company is well positioned in this environment, as management focuses on pricing competitiveness and client experience to drive growth from traffic and share gains. In Brazil, we shifted some risk around, exiting our position in steel producer, Gerdau, amid increased pricing pressure from domestic competitors and import threats. On the other hand, we initiated a position in Gol Airlines, as competitive dynamics remain supportive in Brazil following Aviancia’s exit from the market. The Company ended the period being overweight to Mexico, Brazil and Argentina. We are underweight to Chile, Peru, and Colombia, and have an off-benchmark position in Panama. At the sector level, we are overweight in energy and industrials, while being underweight in financials and communication services.
Brazil continues to provide prospects for positive structural economic reforms. Expectations for gradual improvement in economic activity, monetary easing and advancements in social security reform, remain focal points for our conviction. We maintain a cautious outlook on Mexican equities as the economy slows and domestic policy uncertainty continues to lead to subdued business confidence, though we continue to find conviction in stock specific ideas. In Peru, we are underweight as we see negative newsflow on politics as President Vizcarra’s relationship with Congress continues to deteriorate and the political uncertainty is resulting in reduced business confidence. The Company has recently reduced its underweight position in Colombia as valuations and economic stability has led to intriguing investment opportunities. In Argentina, President Macri’s primary round loss to populist opposition candidate, Alberto Fernandez, was much wider than expected, casting increased uncertainty over the path of economic normalisation given the increased potential for a new government during the fourth quarter of 2019. As such, we have been reducing exposure to Argentina.
Sources:1BlackRock as at 30 September 2019
30 October 2019
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.