Last checked at 28 Apr 2023 17:16
BlackRock Latin American Investment Trust Plc - Portfolio UpdateBlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, April 28
The information contained in this release was correct as at 31 March 2023. Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI - UK9OG5Q0CYUDFGRX4151)
All information is at 31March2023 and unaudited.
Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | -1.7 | -0.6 | -8.3 | 61.0 | -5.8 |
| Share price | -3.6 | -3.4 | -13.4 | 49.7 | -0.9 |
| MSCI EM Latin America (Net Return)^^ | -1.3 | 1.1 | -5.3 | 65.4 | 3.4 |
| US Dollars: | |||||
| Net asset value^ | 0.4 | 2.2 | -13.9 | 60.7 | -17.0 |
| Share price | -1.5 | -0.6 | -18.6 | 49.4 | -12.6 |
| MSCI EM Latin America (Net Return)^^ | 0.8 | 3.9 | -11.1 | 64.9 | -8.9 |
^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: | 399.40p |
| Net asset value - including income: | 401.50p |
| Share price: | 353.00p |
| Total assets#: | £121.8m |
| Discount (share price to cum income NAV): | 12.1% |
| Average discount* over the month – cum income: | 11.7% |
| Net gearing at month end**: | 2.5% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 8.6% |
| Ordinary shares in issue(excluding 2,181,662 shares held in treasury): | 29,448,641 |
| Ongoing charges***: | 1.1% |
#Total assets include current year revenue.
##The yield of 8.6% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 37.32 cents per share) and using a share price of 436.47 US cents per share (equivalent to the sterling price of 353.00 pence per share translated in to US cents at the rate prevailing at 31 March 2023 of $1.2364 dollars to £1.00).
2022 Q2 Interim dividend of 5.74 cents per share (paid on 12 August 2022).
2022 Q3 Interim dividend of 6.08 cents per share (paid on 9 November 2022).
2023 Q4 Interim dividend of 6.29 cents per share plus a Special Dividend of 13.00 cents per share (paid on 12 January 2023).
2023 Q1 Interim dividend of 6.21 cents per share (Payable on 16 May 2023)
\* 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.
*** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for the year ended 31 December 2022.
| Geographic Exposure | % of Total Assets | % of Equity Portfolio * | MSCI EM Latin America Index |
| Brazil | 60.6 | 60.8 | 57.8 |
| Mexico | 27.4 | 27.5 | 31.3 |
| Chile | 4.4 | 4.4 | 6.6 |
| Argentina | 3.5 | 3.6 | 0.0 |
| Panama | 2.0 | 2.0 | 0.0 |
| Colombia | 1.7 | 1.7 | 1.1 |
| Peru | 0.0 | 0.0 | 3.2 |
| Net current assets(inc. fixed interest) | 0.4 | 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 3.0% of the Company’s net asset value.
| Sector | % of Equity Portfolio* | % of Benchmark* |
| Financials | 26.3 | 23.9 |
| Materials | 18.4 | 22.8 |
| Consumer Staples | 15.0 | 16.8 |
| Industrials | 14.5 | 9.0 |
| Energy | 8.9 | 9.8 |
| Real Estate | 4.7 | 0.8 |
| Consumer Discretionary | 4.1 | 1.9 |
| Health Care | 3.3 | 1.4 |
| Communication Services | 2.8 | 7.0 |
| Information Technology | 2.0 | 0.5 |
| Utilites | 0.0 | 6.1 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ===== | ===== | |
*excluding net current assets & fixed interest
| Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Vale – ADS | Brazil | 8.4 | 10.9 |
| Petrobrás – ADR: | Brazil | ||
| Equity | 4.4 | 3.5 | |
| Preference Shares | 2.9 | 4.0 | |
| Grupo Financiero Banorte | Mexico | 6.6 | 3.9 |
| Banco Bradesco – ADR: | Brazil | ||
| Equity | 4.8 | 0.7 | |
| Preference Shares | 1.6 | 2.5 | |
| FEMSA - ADR | Mexico | 5.3 | 3.3 |
| B3 | Brazil | 5.0 | 2.2 |
| AmBev – ADR | Brazil | 3.7 | 2.4 |
| Itaú Unibanco – ADR | Brazil | 3.4 | 4.3 |
| Grupo Aeroportuario del Pacifico - ADS | Mexico | 3.3 | 1.3 |
| Rumo | Brazil | 3.0 | 0.9 |
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the Investment Manager noted;
The Company’s NAV was down by 1.7% in March, slightly underperforming the benchmark, MSCI EM Latin America Index, which returned -1.3% on a net basis over the same period. All performance figures are in sterling terms with dividends reinvested.1
Latin American countries posted mostly negative returns during March, led by Argentina (USD -7.1%m/m), Colombia (USD -0.7%m/m), Chile (USD -0.7%m/m) and Brazil (USD -0.3%m/m). In Brazil Finance Minister Haddad announced the new fiscal framework, which was widely anticipated by the market. The only two countries to outperform the region were Mexico (USD 3.0%m/m) and Peru (USD 4.1%m/m). Mexico’s outperformance was driven by stronger domestic activity.
On a country level, our underweight to Chile and Colombia contributed most to the portfolio’s relative returns. While our off-benchmark name in Argentina was the largest detractor. Security selection in Brazil also detracted from performance during the month.
On an issuer level, Brazilian toll road operator, CCR, has been the most positive contributor. The share price increased on the back of resilient operating trends that were reported in mid-February. Second largest contribution came from Ambev, a beverage producer in Brazil, as the share price regained the losses from earlier in the year. SQM, a Chilean lithium producer for electric vehicles, also contributed on a relative basis, as the stock declined driven by a sharp decline in lithium prices in China due to weakening demand for electric vehicles in China.
On the other hand, our off benchmark holding in Brazilian health care service provider, Hapvida, was the largest detractor during the month and offset most of the portfolio’s gains elsewhere in Brazil. The company performed poorly on the back of weak results, which were driven by a continuation of pressure in the Brazilian health care system (patients continue to use health care services much more frequently than pre-pandemic). We do however maintain conviction in the stock and believe we will see earnings power restore over the medium term, which we believe will be driven by an increased focus on pricing. Another Brazilian company, the textile and apparel group, Arezzo, also detracted from performance, as the company’s results showed weakening margins. However, we continue to think operating momentum looks strong. Our overweight position in Brazilian supermarket chain, Sendas Distribuidora, also detracted from performance on a relative basis as the stock declined on the back of a large shareholder selling part of its holding in the business. Tenaris, our off benchmark holding in Argentina was amongst the top detractors in the month, mainly due to sensitivity to the oil price as the company produces steel tubes and pipes for oil and gas companies.
Changes in the month include a top up to our position in Hapvida as the shares sold off heavily after the results announcement. We think the business is not impaired and see significant upside on a 12-18 month horizon. We locked in profits and exited our position in Vesta, a real estate company in Mexico that’s been benefitting from US companies moving their manufacturing operations to Mexico. We continued to reduce our holding in Banco Santander Chile, a financial services company in Chile, and rotated some of the capital into Bancolombia, a financial services company in Colombia, where we see more attractive valuations. We added to our holdings Arezzo on the weakness arising from their results announcement, while reducing our position in Ambev due to concerns around tax liabilities, which we think are an increased priority for the new government.
In terms of positioning, we remain overweight Brazil and maintain our off-benchmark names in Argentina and Panama. After profit taking, Mexico is now our largest underweight followed by Peru and Chile.
In Mexico, relative performance has been strong. The economy has been stable with a prudent government in terms of spending and the central bank has been proactive in raising interest rates. This has been reflected in the equity market, which is among the top performing markets globally on a year-to-date basis. We have therefore locked in performance here. We still have a structural positive outlook for Mexico, as the country remains a key beneficiary from the shifting of global supply chains.
In Brazil we retain our overweight positioning as we see signs of support for our thesis to play out this year. The government’s fiscal framework, released in March 2023, was more orthodox versus market expectations, which helped to reduce uncertainty regarding the fiscal outlook and is key for the central bank to start reducing interest rates. A reduction in interest rates is the most important support for both the economy and the equity market and these developments could allow the central bank to cut rates soon.
1Source: BlackRock, as of 31 March 2023.
28 April 2023
ENDS
Latest information is available by typing www.blackrock.com/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.