Last checked at 22 Jun 2017 16:01
BlackRock Latin American Investment Trust Plc - Portfolio UpdateBlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, June 22
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)All information is at 31 May 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^ | -3.1 | -5.7 | 39.5 | 7.1 | 4.0 | 74.2 |
| Share price | -1.1 | -4.1 | 33.6 | 2.7 | 0.4 | 64.0 |
| MSCI EM Latin America | -2.1 | -5.3 | 44.1 | 10.5 | 3.1 | 92.4 |
| US Dollars: | ||||||
| Net asset value^ | -3.3 | -2.1 | 23.6 | -17.5 | -12.6 | 29.9 |
| Share price | -1.3 | -0.4 | 18.4 | -21.0 | -15.7 | 22.2 |
| MSCI EM Latin America | -2.3 | -1.7 | 27.8 | -15.0 | -13.6 | 43.2 |
^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: | 468.50p |
| Net asset value – cum income: | 473.41p |
| Share price: | 415.25p |
| Total Assets#: | £193.4m |
| Discount (share price to cum income NAV): | 12.3% |
| Average discount* over the month – cum income: | 12.8% |
| Net gearing at month end**: | 3.7% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 2.9% |
| 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 | 62.2 | 62.7 | 55.5 | |
| Mexico | 26.1 | 26.3 | 28.6 | |
| Argentina | 4.8 | 4.9 | 0.0 | |
| Peru | 4.2 | 4.2 | 2.9 | |
| Chile | 1.4 | 1.4 | 9.5 | |
| Colombia | 0.5 | 0.5 | 3.5 | |
| Net current assets (inc.Fixed interest) | 0.8 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 30.1 | 29.5 |
| Consumer Staples | 21.1 | 18.1 |
| Materials | 14.5 | 14.8 |
| Energy | 10.3 | 8.0 |
| Industrials | 6.5 | 6.7 |
| Telecommunication Services | 5.7 | 6.6 |
| Consumer Discretionary | 5.7 | 6.0 |
| Utilities | 3.3 | 6.2 |
| Real Estate | 1.6 | 1.5 |
| Information Technology | 1.2 | 1.5 |
| Health Care | 0.0 | 1.1 |
| ----- | ----- | |
| 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 | 7.9 | 6.2 |
| Petrobras | Brazil | 6.5 | 5.0 |
| Banco Bradesco | Brazil | 5.8 | 5.9 |
| Vale | Brazil | 5.7 | 4.6 |
| Femsa | Mexico | 4.3 | 3.0 |
| AmBev | Brazil | 4.1 | 4.8 |
| BM&F Bovespa | Brazil | 3.9 | 2.1 |
| America Movil | Mexico | 3.6 | 4.7 |
| Grupo Financiero Banorte | Mexico | 3.1 | 2.5 |
| Kroton Educacional | Brazil | 2.9 | 1.1 |
Commenting on the markets, Will Landers, representing the Investment Manager noted;
For the month of May 2017, the Company’s NAV fell by 3.1%, and the share price fell by 1.1%. The Company’s benchmark, the MSCI EM Latin America Index, fell by 2.1% (all performance figures are in sterling terms).
Our off-benchmark allocation to Argentina remained a top contributor for the period as investors expected MSCI to reclassify the country as an emerging market. However, on 20 June 2017, MSCI announced the postponement of their decision, citing the need to monitor the persistence of recently implemented market accessibility improvements. Whilst this result may be a disappointment to some market participants, we would remind investors of the substantial positive macro-economic changes that Argentina has witnessed over recent years. We believe it is still a compelling investment destination for long-term investors and have been looking to selectively add exposure on weakness. Pampa Energia and internet name, Mercadolibre, were among the top performers for the month. Our overweight to Peru also contributed positively, despite the marginal currency depreciation last month on the back of stronger than expected trade surplus numbers and a March GDP growth print that was ahead of expectations. On the other hand, our heavy overweight to Brazil earlier in the month detracted as the market corrected sharply on news of another political scandal, putting President Temer and his reform agenda in question. As a result Petrobras and Bradesco were among the largest individual detractors in May. An underweight to Mexican telecom, America Movil, also weighed on performance as the stock gained on easing competitive and regulatory pressures.
During the month, we trimmed our Brazilian overweight following headlines implicating President Temer in corruption wrongdoing, specifically reducing exposure to Petrobras and Bradesco. We also reduced our underweight to America Movil. The Company ended the period overweight Brazil and Peru, while being underweight Chile, Mexico and Colombia. We also maintain off-benchmark positions in Argentina.
We entered the second quarter of the year maintaining overweight positions in Brazil, Peru and off-benchmark Argentina, while maintaining underweight positions in Chile, Colombia and Mexico. In the near term, negative sentiment concerning another potential presidential scandal has reversed the green shoots seen over the last couple of months and has put President Temer’s term and reform agenda into question. Should we see continuity of government, the primary drivers for Brazilian equities should remain the same: a) the continued easing cycle (albeit at a slower pace) by the Central Bank which should help to bring forward the needed economic recovery; and b) progress on the reform agenda, especially pension reform, which should help to bring stability to government accounts in the medium term. Once the latter passes, we believe this will open the door for the Central Bank to bring the easing cycle further forward and potentially bring rates lower than market expectations. Meanwhile, despite a more conciliatory tone from the US government on the trade front, we maintain our cautious view on Mexican growth, and therefore our underweight (despite a PRI win in the gubernatorial election in the state of Mexico in early June, results were not conclusive as to the likelihood of a MORENA victory in next year’s presidential elections). Despite slower than expected progress on the infrastructure front, we continue to favour Peru among its Andean neighbours, and see improving economic activity in Argentina as a positive for that country’s stock market.
22 June 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.