BlackRock Latin Am Portfolio Update
September 20 2017 - 11:01AM
UK Regulatory
TIDMBRLA
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 31 August 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 16.1 24.5 7.8 17.5 102.2
Share price 8.1 15.6 25.7 9.1 16.1 89.6
MSCI EM Latin America 7.1 14.3 25.1 10.0 16.1 119.9
US Dollars:
Net asset value^ 5.0 15.8 22.4 -16.4 -4.5 50.5
Share price 5.7 15.4 23.6 -15.3 -5.7 41.0
MSCI EM Latin America 4.6 14.1 23.1 -14.6 -5.8 63.4
^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: 543.04p
Net asset value - cum income: 549.41p
Share price: 480.00p
Total Assets#: GBP232.6m
Discount (share price to cum income NAV): 12.6%
Average discount* over the month - cum income: 14.1%
Net gearing at month end**: 7.1%
Gearing range (as a % of net assets): 0-25%
Net yield##: 2.5%
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 63.1 63.4 56.2
Mexico 25.8 25.9 27.8
Argentina 4.2 4.3 0.0
Peru 3.7 3.7 3.0
Chile 1.9 1.9 9.6
Panama 0.5 0.4 0.0
Colombia 0.4 0.4 3.4
Net current assets 0.4 0.0 0.0
(inc.Fixed interest)
----- ----- -----
Total 100.0 100.0 100.0
----- ----- -----
Sector % of Equity Portfolio % of Benchmark
*
Financials 31.9 30.5
Consumer Staples 17.7 16.6
Materials 14.1 15.7
Consumer Discretionary 10.2 6.4
Energy 9.1 7.5
Telecommunication Services 6.0 6.6
Industrials 5.9 6.3
Real Estate 1.5 1.6
Utilities 1.5 6.3
Information Technology 1.1 1.4
Health Care 1.0 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 7.4 6.4
Banco Bradesco Brazil 7.0 6.3
Petrobras Brazil 6.8 4.6
Vale Brazil 6.0 5.3
Ambev Brazil 5.0 4.6
America Movil Mexico 4.1 4.8
Femsa Mexico 3.8 3.0
Grupo Financiero Banorte Mexico 3.3 2.6
B3 (formerly BM&F Bovespa) Brazil 3.1 2.2
Credicorp Peru 2.7 2.1
Commenting on the markets, Will Landers, representing the Investment Manager
noted;
For the month of August 2017, the Company's NAV rose by 7.5% with the share
price rising by 8.1%. The Company's benchmark, the MSCI EM Latin America Index,
rose by 7.1% (all performance figures are in sterling terms with income
reinvested and are net of ongoing charges).
Our selection within Mexico was the primary contributor in August, despite
marginal Peso weakness and higher inflation both contributing to broad
underperformance relative to the other Latin American markets. Our lack of
positioning in the media name, Televisa, greatly benefitted the portfolio as
the company has experienced falling advertising revenues and a drop in
licensing and syndication as client growth declines. Similarly, the decision to
not hold positions in airport operators GAP and ASUR, and to exit the low-cost
airline, Volaris, last month also contributed to relative performance as
traffic volumes continue to decelerate from the first half of the year.
Portfolio declines were largely driven by stock specific factors. Cemex was
among the top detractors from performance in August as Hurricane Harvey may
have a negative impact on the company's Texas-based operations. Our overweight
holding in the Brazilian rail logistics company, Rumo, was the largest
individual detractor for the period.
During the month broad positioning remained relatively unchanged, though we
shifted some Mexican exposure. Specifically, we sold down our Grupo Bimbo
position, using the proceeds to buy Gruma on the back of better growth and
value dynamics. We also exited our position in tequila producer Becle given
weaker than expected performance post its IPO (Initial Public Offering). In
Brazil, we took profits from BM&F Bovespa and Hypermarcas, while adding
exposure to more domestic consumption-oriented names such as retailers Lojas
Americanas and Lojas Renner. The Company ended the month being overweight
Brazil and Peru while being underweight Chile and Colombia. We also maintain an
off-benchmark allocation to Argentina. At the sector level, we are overweight
energy and select consumer names, while being underweight utilities and
telecoms.
As we enter September, our positioning and outlook remain relatively unchanged.
We continue to be overweight in Brazil, and off-benchmark in Argentina, while
being underweight in Chile, Colombia and Mexico. Concerns regarding another
potential overhang in Brazil's presidency have abated, 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 (the Central Bank cut
rates another 100 bps in September to 8.25% - 600 basis points of easing so far
during the current cycle); and b) continued progress on the reform agenda,
especially pension reform, which should help to bring stability to government
accounts in the medium term. 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 position in the country - uncertainties
regarding next year's presidential cycle add to our conviction on such
positioning. We continue to be underweight 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 October mid-term elections expected to give a boost to President Macri's
reform agenda.
20 September 2017S
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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