BlackRock Latin Am Portfolio Update
August 16 2017 - 8:22AM
UK Regulatory
TIDMBRLA
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 31 July 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five ^^Since
month months year years years 31.03.06
% % % % % %
Sterling:
Net asset value^ 7.5 4.6 18.2 11.0 8.9 88.2
Share price 8.9 5.8 20.0 7.2 4.3 75.4
MSCI EM Latin America 6.7 4.5 19.3 12.8 6.4 105.4
US Dollars:
Net asset value^ 9.1 6.6 17.3 -13.3 -8.2 43.2
Share price 10.5 7.8 19.1 -16.3 -12.2 33.4
MSCI EM Latin America 8.3 6.5 18.4 -11.9 -10.5 56.1
^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: 505.78p
Net asset value - cum income: 511.21p
Share price: 444.00p
Total Assets#: GBP211.2m
Discount (share price to cum income NAV): 13.1%
Average discount* over the month - cum income: 14.2%
Net gearing at month end**: 5.9%
Gearing range (as a % of net assets): 0-25%
Net yield##: 2.7%
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 % of Equity MSCI EM Latin
Assets Portfolio * American Index
Brazil 63.9 63.3 55.2
Mexico 27.8 27.5 28.9
Argentina 3.6 3.6 0.0
Peru 3.2 3.2 2.9
Chile 1.5 1.5 9.5
Panama 0.5 0.5 0.0
Colombia 0.4 0.4 3.5
Net current liabilities -0.9 0.0 0.0
(inc. fixed interest)
----- ----- -----
Total 100.0 100.0 100.0
----- ----- -----
Sector % of Equity Portfolio % of Benchmark
*
Financials 31.5 29.9
Consumer Staples 20.0 17.0
Materials 14.4 15.3
Energy 9.5 7.7
Consumer Discretionary 8.4 6.3
Industrials 6.2 6.5
Telecommunication Services 5.4 6.6
Real Estate 1.6 1.7
Utilities 1.3 6.3
Information Technology 1.0 1.6
Health Care 0.7 1.1
----- -----
Total 100.0 100.0
----- -----
*excluding net current liabilities & fixed interest
Ten Largest Equity Investments (in percentage order)
Country of % of % of
Company Risk Equity Portfolio Benchmark
Itau Unibanco Brazil 7.3 6.2
Petrobras Brazil 7.0 4.8
Banco Bradesco Brazil 6.8 6.2
Vale Brazil 5.8 5.0
Ambev Brazil 4.9 4.6
Femsa Mexico 4.1 3.2
BM&F Bovespa Brazil 3.5 2.2
America Movil Mexico 3.5 4.7
Grupo Financiero Banorte Mexico 3.4 2.7
Groupo Mexico Mexico 2.8 2.0
Commenting on the markets, Will Landers, representing the Investment Manager
noted;
For the month of July 2017, the Company's NAV rose by 7.5% and the share price
rose by 8.9%. The Company's benchmark, the MSCI EM Latin America Index, rose by
6.7% (all performance figures are in sterling terms with income reinvested and
are net of ongoing charges).
Our higher than index weighting and stock selection in Brazil were the top
contributors in July, as the Brazilian Real (BRL) gained almost 6% against the
US Dollar (USD), while higher commodity prices and the central bank's
willingness to continue cutting rates at an accelerated pace supported the
market. Petrobras and Bradespar, a holding company for Vale, were among the
month's top performers as both oil and iron ore made strong gains in July, the
latter of which was driven by strong manufacturing and economic data from
China. Rail operator, Rumo, was the largest individual contributor in July,
gaining on news surrounding positive negotiations towards the extension of
their rail concessions, as well the government announcing the public hearing
and auction dates for the North-South railway. Lower than index weightings in
Colombia and Mexico also benefitted the portfolio, as both markets
underperformed the broader region. On the other hand, our off-benchmark
allocation to Argentina weighed on performance, with utility Pampa Energia
among the largest detractors. Mexican consumer staple, Arca Continental, was
July's worst performing stock, which missed on net income partially due to
foreign exchange (FX) charges related to their US acquisition.
During the month broad positioning remained relatively unchanged, though we did
shift our Brazilian financials positioning, reducing exposure to Itau and BM&F
Bovespa, redeploying those funds to Bradesco on better upside expectations. On
the other hand, we sold down our position in Mexican airline, Volaris, as
pricing pressure in Mexico City intensifies as the Aeromexico/Delta JV has been
seen to be ramping up capacity more than expected. We also took profits in Raia
Drogasil after strong performance and participated in the IPO of Brazilian
insurance firm, IRB. The Company ended the month with an above index weighting
in Brazil and Peru while having a below index weighting in Chile, Colombia, and
Mexico. We also maintain an off-benchmark allocation to Argentina. At the
sector level, we are overweight energy and select consumer staples, while being
underweight utilities and telecom.
As we enter the third quarter, our positioning and outlook remain relatively
unchanged. Concerns regarding another potential overhang in Brazil's
presidency have abated with the recent 263-227 vote in which the lower house
rejected the corruption charges brought against President Temer, allowing the
administration to pivot back towards their economic agenda. With increased
stability from the political front, the primary drivers for Brazilian equities
should remain the same: a) the continued easing cycle 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 (Institutional Revolutionary
Party) win in the gubernatorial election (Mexico's national governor elections)
in the state of Mexico in early June, results were not conclusive as to the
likelihood of a MORENA (National Regeneration Movement) victory in next year's
presidential elections). We continue to hold a below index weighting in 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 the recent correction providing a
positive entry point for longer-term investments.
16 August 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.
END
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