Last checked at 6 Jun 2019 15:10
BlackRock Latin American Investment Trust Plc - Portfolio UpdateBlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, June 5
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)All information is at 30 April 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 | -6.3 | 0.0 | 50.8 | 29.0 |
| Share price | 7.7 | 3.1 | 6.5 | 59.7 | 30.4 |
| MSCI EM Latin America (Net Return)^^ | 0.4 | -4.9 | 0.2 | 46.1 | 24.8 |
| US Dollars: | |||||
| Net asset value^ | 1.2 | -7.2 | -5.4 | 34.0 | -0.5 |
| Share price | 7.7 | 2.2 | 0.8 | 41.9 | 0.6 |
| MSCI EM Latin America (Net Return)^^ | 0.4 | -5.8 | -5.1 | 30.0 | -3.7 |
^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. Historically the benchmark data for the Company has always been stated on a Gross basis.
Sources: BlackRock, Standard & Poor’s Micropal
| At month end | |
| Net asset value – capital only: | 524.27p |
| Net asset value – cum income: | 524.94p |
| Share price: | 480.00p |
| Total Assets#: | £226.2m |
| Discount (share price to cum income NAV): | 8.6% |
| Average discount* over the month – cum income: | 11.3% |
| Net gearing at month end**: | 11.2% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 5.1% |
| 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 5.1% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 32.11 cents per share) and using a share price of $625.75 cents per share (equivalent to the sterling price of 480.00 pence per share translated in to US cents at the rate prevailing at 30 April 2019 of $1.30365 dollars to £1.00).
2018 Q3 interim dividend of 7.57 cents per share (paid on 23 August 2018)2018 Q4 interim dividend of 7.85 cents per share (paid on 9 November 2018)2019 Q1 interim dividend of 8.13 cents per share (paid on 8 February 2019)2019 Q2 interim dividend of 8.56 cents per share (declared on 1 April 2019 and payable on 17 May 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 | 66.8 | 66.0 | 60.6 | |
| Mexico | 27.9 | 27.5 | 23.6 | |
| Argentina | 4.7 | 4.6 | 0.0 | |
| Chile | 1.8 | 1.9 | 8.5 | |
| Colombia | 0.0 | 0.0 | 3.7 | |
| Peru | 0.0 | 0.0 | 3.6 | |
| Net current liabilities (inc. fixed interest) | -1.2 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 31.1 | 33.7 |
| Consumer Staples | 16.6 | 15.8 |
| Materials | 14.0 | 15.3 |
| Energy | 10.9 | 10.3 |
| Industrials | 8.8 | 6.1 |
| Communication Services | 6.9 | 6.5 |
| Utilities | 4.0 | 5.2 |
| Real Estate | 2.9 | 1.5 |
| Information Technology | 2.5 | 0.3 |
| Consumer Discretionary | 2.3 | 4.9 |
| Health Care | 0.0 | 0.4 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current assets & fixed interestTen Largest Equity Investments (in percentage order)
| Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Itau Unibanco | Brazil | 9.9 | 6.6 |
| Petrobras | Brazil | 9.5 | 7.9 |
| Banco Bradesco | Brazil | 5.8 | 7.3 |
| Vale | Brazil | 5.3 | 6.4 |
| Femsa | Mexico | 4.7 | 3.0 |
| Grupo Financiero Banorte | Mexico | 4.5 | 2.6 |
| America Movil | Mexico | 4.2 | 4.0 |
| Banco do Brasil | Brazil | 3.5 | 1.7 |
| B3 | Brazil | 3.1 | 2.9 |
| Rumo Logística Operada Multimodal | Brazil | 2.9 | 0.8 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of April 2019, the Company’s NAV rose by 1.1%1 with the share price rising by 7.7%1. The Company’s benchmark, the MSCI EM Latin America Index (net basis), rose by 0.4%2 (all performance figures are in sterling terms with dividends reinvested).
Latin America underperformed both emerging and developed markets during the month, stymied from offsetting intra-regional performance. Stock selection in Mexico was the top contributor in April, supported by strong currency appreciation. Mexican lender, Banorte, performed well during the first quarter of 2019 following strong growth from their insurance business and an improving NPL (non-performing loan) position. Airport operator, GAP, also contributed after posting strong aero and non-aero revenue growth in the first quarter of 2019. Similarly, a lack of positioning in Colombia also benefitted relative performance as the market and currency cooled off despite a strong month for oil. Brazilian food producer, BRF, was the month’s top performer as the company benefitted from Asian swine flu affecting supply chains. Alternatively our off-benchmark allocation to Argentina continued to detract from performance amid inflation concerns. An underweight positon in Brazilian retailer, Lojas Renner, was among the month’s top detractors as the stock surged on positive first quarter results, which saw strong top line growth due to double digit same store sales and improving operating leverage. Brazilian budget airline, Azul, was April’s largest detractor.
Overall positioning was relatively unchanged over the month however we did increase our gross exposure, adding to Brazil on market weakness and initiating a position in Mexican staple, Kimberly Clark de Mexico. Brazil remains our largest overweight, however, as we consolidated some exposure into positions we have most conviction in. Notably, we took profits from retailers, B2W and Lojas Renner, using proceeds to increase exposure across existing consumer staples and financials names. Similarly we have been taking advantage of price and currency weakness to add to our holdings in Mexico bringing broader positioning to a broadly neutral level. In Chile, we exited our position in mall operator, Falabella, as we expect heavy e-commerce investment to impact margins in the near term. The Company ended the month being overweight in Brazil whilst being underweight in Chile, Peru and Colombia, and neutral in Mexico. We also maintain an off-benchmark allocation to Argentina. At the sector level, we are overweight the domestic consumer and real estate, while being underweight utilities and financials.
Brazil remains our largest overweight, given our positive expectations for the incoming administration. So far President-elect Jair Bolsonaro has delivered on his campaign promises, looking to reduce the size of government by initially reducing the number of ministries, naming sector/subject experts to lead cabinets, and pointing to a continuation of the reform process initiated two years ago. Meanwhile, the outlook for upcoming corporate results points to a continuation in the economic recovery, providing strong momentum for growth into 2019. Elsewhere, the cancellation of NAIM (the New Mexico International Airport) reminded markets of the concerns regarding increasing populism for the incoming administration in Mexico, reiterating our cautiousness with Mexican equities. We remain underweight the Andean region due to a combination of unattractive valuation and disappointing growth. Finally, the dramatic sell off in Argentina in 2018 leaves stocks trading at attractive valuations while interest rates and currency have mostly stabilized providing a foundation for the economy to rebound from recent downturn.
Sources:1BlackRock as at 30 April 20192Datastream as at 30 April 2019
6 June 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.