Last checked at 21 Nov 2017 16:23
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 PLC (LEI: UK9OG5Q0CYUDFGRX4151)All information is at 31 October 2017 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^ | -3.7 | 2.4 | 1.5 | 14.6 | 10.3 | 92.6 |
| Share price | -1.5 | 6.8 | 7.0 | 18.0 | 12.7 | 87.3 |
| MSCI EM Latin America | -2.6 | 1.7 | 1.6 | 16.3 | 8.1 | 109.0 |
| US Dollars: | ||||||
| Net asset value^ | -4.7 | 3.1 | 10.4 | -4.9 | -8.9 | 47.7 |
| Share price | -2.5 | 7.6 | 16.4 | -2.1 | -7.0 | 43.6 |
| MSCI EM Latin America | -3.6 | 2.5 | 10.5 | -3.4 | -10.9 | 60.0 |
^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: | 517.24p |
| Net asset value – cum income: | 519.05p |
| Share price: | 470.00p |
| Total Assets#: | £224.0m |
| Discount (share price to cum income NAV): | 9.5% |
| Average discount* over the month – cum income: | 11.4% |
| Net gearing at month end**: | 9.6% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 2.5% |
| Ordinary shares in issue***: | 39,369,620 |
| Ongoing charges****: | 1.2% |
#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 2016.Geographic Exposure
| % of Total Assets | % of Equity Portfolio * | MSCI EM Latin American Index | ||
| Brazil | 64.4 | 64.5 | 57.8 | |
| Mexico | 23.7 | 23.7 | 25.3 | |
| Argentina | 5.4 | 5.3 | 0.0 | |
| Peru | 3.8 | 3.8 | 3.2 | |
| Chile | 1.9 | 1.9 | 10.5 | |
| Panama | 0.5 | 0.5 | 0.0 | |
| Colombia | 0.3 | 0.3 | 3.2 | |
| Net current assets (inc. fixed interest) | 0.0 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 31.7 | 30.6 |
| Consumer Staples | 15.5 | 16.3 |
| Materials | 12.5 | 15.4 |
| Consumer Discretionary | 12.3 | 6.1 |
| Energy | 9.3 | 8.8 |
| Telecommunication Services | 7.1 | 6.4 |
| Industrials | 6.2 | 6.1 |
| Utilities | 2.1 | 6.3 |
| Real Estate | 1.4 | 1.5 |
| Information Technology | 1.1 | 1.3 |
| Health Care | 0.8 | 1.2 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current liabilities & fixed interestTen Largest Equity Investments (in percentage order)
| Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Itau Unibanco | Brazil | 7.4 | 6.5 |
| Banco Bradesco | Brazil | 7.0 | 6.5 |
| Petrobras | Brazil | 6.8 | 5.7 |
| Vale | Brazil | 5.3 | 4.7 |
| America Movil | Mexico | 5.2 | 4.5 |
| AmBev | Brazil | 5.1 | 4.7 |
| Femsa | Mexico | 3.4 | 2.7 |
| B3 | Brazil | 3.2 | 2.4 |
| Grupo Financiero Banorte | Mexico | 2.9 | 2.3 |
| Credicorp | Peru | 2.8 | 2.2 |
Commenting on the markets, Will Landers, representing the Investment Manager noted;
For the month of October 2017, the Company’s NAV fell by 3.7%* with the share price falling by 1.5%*. The Company’s benchmark, the MSCI EM Latin America Index, fell by 2.6%* (all performance figures are in sterling terms with income reinvested and are net of ongoing charges).
The portfolio’s off-benchmark allocation to Argentina continues to be a source of alpha for the Company, with the market showing support for incremental acceleration of President Macri’s reform agenda. Banking group, Grupo Supervielle, as well as utility, Pampa Energia were among the top performers. The portfolio’s underweight to Colombia also benefitted the Company in October as the market contracted from the Peso depreciating by 3.4%** against the US Dollar; overall, activity remains weak despite a recovery in oil. Subsequently, our lack of positioning in Bancolombia had a large positive impact to relative performance. On the other hand, the portfolio’s overweight to the Brazilian consumer (including positions in Magazine Luiza and Kroton) weighed on performance, as the Real slid by -3.3%** and activity data disappointed. Mexican insurer, Gentera was the largest individual detractor as the company guided earnings downwards for 2018. The broad portfolio underweight to Chile also hurt relative performance amid improving market confidence in October.
During the month, broad positioning remained relatively unchanged, however we exited our position in Gentera following a negative third quarter call. On the other hand we increased exposure to America Movil amid an improving regulatory and competitive environment. We also shifted some exposure in Brazil, topping up positions in energy names, Petrobras and Ultrapar, while exiting BRF after the surprise announcement of their CEO’s departure. We ended the month being overweight Brazil and Peru while being underweight Chile and Colombia. We also maintain an off-benchmark allocation to Argentina. At the sector level, we are overweight the domestic consumer and energy, while being underweight utilities and materials.
Into the fourth quarter of 2017, our positioning and outlook remain relatively unchanged. Despite going through yet another round of political headwinds the primary drivers for Brazilian equities should remain the same: a) the continued easing cycle by the Central Bank should help bring forward the needed economic recovery (the Central Bank cut rates another 75 bps** in October, bringing the SELIC (Sistema Especial de Liquidação e Custodia, the Brazilian Central Bank interest rate) down to 7.50%; the market has seen 675 basis points of easing so far during the current cycle, resulting in the SELIC hitting its second lowest point in history); and b) continued progress on the reform agenda, especially pension reform (with a focus on minimum retirement age implementation), which should help to bring stability to government accounts in the medium term. Meanwhile, the recent round of NAFTA (North American Free Trade Agreement) negotiations illustrated that the process will be long and, and we maintain our cautious view on Mexican growth, and therefore our underweight - uncertainties regarding next year’s presidential cycle add to our conviction on such positioning. We continue to underweight Chile due to rich valuations and lack of free-float liquidity, and despite slower than expected progress on the infrastructure front, we continue to favour Peru among its Andean neighbours. Argentina remains another top region for the strategy as fundamentals persist, with October mid-term elections providing support for a continuation of President Macri’s reform agenda.
*Source: BlackRock as of 31 October 2017**Source: JPM as of 31 October 2017
21 November 2017
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.