BlackRock Latin American Investment Trust Plc Portfolio Update
19 Janvier 2024 - 6:29PM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 31 December 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 31 December 2023 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ 7.2 11.3 29.9 37.9 29.6
Share price 12.3 14.3 27.6 33.9 38.0
MSCI EM Latin America 7.5 12.5 25.2 42.5 34.4
(Net Return)^^
US Dollars:
Net asset value^ 7.9 16.3 37.7 28.6 29.8
Share price 13.1 19.4 35.3 24.9 38.3
MSCI EM Latin America 8.3 17.6 32.7 32.8 34.5
(Net Return)^^
^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: 495.43p
Net asset value - including income: 505.43p
Share price: 447.00p
Total assets#: £150.9m
Discount (share price to cum income 11.6%
NAV):
Average discount* over the month - 13.4%
cum income:
Net Gearing at month end**: 0.6%
Gearing range (as a % of net 0-25%
assets):
Net yield##: 5.1%
Ordinary shares in issue(excluding 29,448,641
2,181,662 shares held in treasury):
Ongoing charges***: 1.13%
#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 28.82
cents per share) and using a share price of 569.84 US cents per share
(equivalent to the sterling price of 447.00 pence per share translated in to US
cents at the rate prevailing at 31 December 2023 of $1.275 dollars to £1.00).
2023 Q1 Interim dividend of 6.21 cents per share (Paid on 16 May 2023)
2023 Q2 Interim dividend of 7.54 cents per share (Paid on 11 August 2023)
2023 Q3 Interim dividend of 7.02 cents per share (Paid on 09 November 2023)
2024 Q4 Interim dividend of 8.05 cents per share (To be paid on 09 February
2024.
*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 % of Equity MSCI EM Latin America Index
Total Portfolio *
Assets
Brazil 59.6 60.1 61.3
Mexico 27.0 27.2 29.0
Chile 5.6 5.6 5.4
Argentina 2.8 2.9 0.0
Colombia 2.5 2.5 1.2
Panama 1.7 1.7 0.0
Peru 0.0 0.0 3.1
Net current Assets 0.8 0.0 0.0
(inc. fixed
interest)
----- ----- -----
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 1.4% of the Company's net asset value.
Sector % of Equity Portfolio* % of Benchmark*
Financials 22.8 25.9
Consumer Staples 18.3 16.1
Materials 15.8 18.3
Industrials 12.4 10.7
Consumer Discretionary 10.6 1.9
Energy 9.9 12.8
Health Care 4.0 1.6
Real Estate 2.7 1.3
Communication Services 1.9 4.0
Information Technology 1.6 0.6
Utilites 0.0 6.8
----- -----
Total 100.0 100.0
===== =====
*excluding net current assets & fixed interest
Company Country of Risk % of % of
Equity Portfolio Benchmark
Vale - ADS Brazil 9.6 8.1
Petrobrás - ADR: Brazil
Equity 5.4 4.5
Preference 3.2 5.5
Shares
Banco Bradesco - Brazil
ADR:
Equity 4.5 0.8
Preference 1.7 2.8
Shares
Walmart de México y Mexico 5.9 3.3
Centroamérica
B3 Brazil 5.1 2.6
FEMSA - ADR Mexico 4.8 3.8
AmBev - ADR Brazil 4.2 2.0
Grupo Aeroportuario Mexico 4.0 1.0
del Pacifico - ADS
Itaú Unibanco - ADR Brazil 3.8 5.1
Grupo Financiero Mexico 3.1 3.9
Banorte
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
The Company's NAV rose by 7.2% in December, slightly underperforming the
benchmark (the MSCI Emerging Markets Latin America Index) which returned 7.5% on
a net basis over the same period. All performance figures are in sterling terms
with dividends reinvested.1
December was another strong month for Latin American markets, with all countries
in the green. The region was the best performing region globally, up by 8.3%
over the month. Performance was led by Peru (24.5%), Mexico (9.5%), and Colombia
(13.5%), while Argentina (+4.6), Brazil (+7.2%), and Chile (+5.9%)
underperformed the others on a relative basis.
At the portfolio level, our overweight in the Consumer Discretionary space in
Brazil was the key contributor to performance, alongside our position in Chilean
industrials. On the other hand, stock selection in the Materials sector in
Mexico was the biggest drag on performance. Having no exposure to Peru also
hurt, given the relative outperformance of this market over the month.
From a security lens, Brazilian fashion retailer Soma was the biggest
contributor to relative returns. As we have more visibility on the impact of the
tax reform in Brazil, investors seem to increasingly come to the conclusion that
the negative impact is either priced in already or will be passed on to end
consumers. The retail sector was also supported by the increased likelihood for
rate cuts in the US which should provide room for the central bank to ease more
aggressively in 2024. Grupo Aeroportuario del Pacífico (GAPB), the Mexican
airport operator, continued its strong run in December and was among the top
contributors to relative returns for a second consecutive month. The strong
performance in both months reflects that investors overestimated the impact of
the changes to airport concessions that were implemented back in October.
Chilean lithium producer SQM was another strong performer. The stock performed
well in anticipation of the announcement of the partnership with Codelco, which
has extended its lease in the Atacama until 2060.
As for detractors, Mexican silver miner Mag Silver, was the worst performer over
the month. The performance was largely driven by the decline in silver prices.
IRB, the Brazilian reinsurance company, was another detractor, largely reversing
strong performance of the previous month. Not owning Peruvian mining company
Buenaventura also hurt portfolio performance as the stock enjoyed a 60%
increase after Antofagasta PLC announced that it had acquired a 19% stake in the
mining company.
Over the course of December, we made few changes to the portfolio. We took
profits and exited Colombian oil & gas company Ecopetrol as our investment
thesis has played out and as we are getting incrementally more negative on the
outlook for oil prices. We rotated some of our Mexican exposure by reducing our
position in Banorte and adding to our holding in Walmart Mexico, reflecting
analyst conviction. We also trimmed Globant after strong performance.
Argentina continues to the be largest portfolio overweight, driven by two off
-benchmark holdings. Our second largest overweight position is in Panama, driven
by an off-benchmark holding in the Industrials sector. On the other hand, we
remain underweight in Peru due to its political and economic uncertainty. We
remain optimistic about the outlook for Brazil and have been selective in our
positioning, with a preference for domestic businesses that will benefit more
from further rate cuts.
Outlook
We remain optimistic about the outlook for Latin America. Central banks have
been proactive in increasing interest rates to help control inflation, which has
fallen significantly across the region. As such we have started to see central
banks beginning to lower interest rates, which should support both economic
activity and asset prices. In addition, the whole region is benefitting from
being relatively isolated from global geopolitical conflicts.
We are especially positive about the outlook for Brazil. We believe that the
combination of a benign outlook for inflation and a relatively prudent fiscal
policy by the government will enable the central bank to decrease interest rates
faster than market participants currently expect. We expect further upside to
the equity market in the next 12-18 months as local capital starts flowing back
into the market.
We remain positive on the outlook for the Mexican economy as it is a key
beneficiary of the friend-shoring of global supply chains. Mexico remains
defensive as both fiscal and the current accounts are in order. While our view
remains positive, we have taken profits after a strong relative performance,
solely because we see even more upside in other Latin American markets such as
Brazil. We also note that the Mexican economy will be relatively more sensitive
to a potential slowdown in economic activity in the United States.
We continue to closely monitor the political and economic situation in
Argentina, after libertarian Javier Milei unexpectedly won the presidential
elections in November. Milei is facing a very difficult situation, with
inflation at 210% year on year, foreign currency reserves depleted and multiple
economic imbalances. The country needs to go through a painful adjustment
process and we worry about the hardship that this inflicts on society. We are
hopeful that the country comes out stronger after the adjustment process, but we
have limited exposure to the Argentinian economy for now.
1Source: BlackRock, as of 31 December 2023.
19 January 2024
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.
This information was brought to you by Cision http://news.cision.com
END
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