BlackRock Latin Am Portfolio Update
July 17 2018 - 10:20AM
UK Regulatory
TIDMBRLA
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 30 June 2018 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ -3.9 -16.8 -1.9 25.4 1.5
Share price -4.4 -17.8 -2.4 24.3 0.8
MSCI EM Latin America -2.3 -12.5 -1.4 27.7 3.4
US Dollars:
Net asset value^ -4.6 -21.7 -0.3 5.3 -11.6
Share price -5.2 -22.7 -0.8 4.3 -12.2
MSCI EM Latin America -3.0 -17.7 0.2 7.2 -10.0
^cum income
Sources: BlackRock, Standard & Poor's Micropal
At month end
Net asset value - capital only: 453.20p
Net asset value - cum income: 458.63p
Share price: 390.00p
Total Assets#: GBP195.1m
Discount (share price to cum income NAV): 15.0%
Average discount* over the month - cum income: 14.9%
Net gearing at month end**: 9.0%
Gearing range (as a % of net assets): 0-25%
Net yield##: 4.0%
Ordinary shares in issue***: 39,259,620
Ongoing charges****: 1.1%
#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. As
previously announced, the Board of the BlackRock Latin American Investment
Trust plc have introduced a new dividend policy whereby the Company will pay
regular quarterly dividends equivalent to 1.25% of the Company's US Dollar cum
income NAV on the last working day of December, March, June and September each
year, with the dividends being paid in November, February, May and August each
year respectively. The first quarterly dividend under this new policy of 7.57
cents was declared on 3 July 2018 and is payable on 23 August 2018. The yield
on the Company's shares projecting future quarterly dividends forward based on
four quarters being paid at the same rate as the July dividend, and based on
the Company's share price at 30 June 2018 converted to US dollars at the
exchange rate on 30 June 2018, would be 5.8%.
*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 2,181,662 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
2017.
Geographic Exposure
% of Total % of Equity MSCI EM Latin
Assets Portfolio * America Index
Brazil 64.4 64.0 54.2
Mexico 27.7 27.6 27.2
Chile 4.4 4.3 10.4
Argentina 2.9 2.9 0.0
Colombia 1.2 1.2 4.4
Peru 0.0 0.0 3.8
Net current assets/ -0.6 0.0 0.0
liabilities (inc. fixed
interest)
----- ----- -----
Total 100.0 100.0 100.0
----- ----- -----
Sector % of Equity Portfolio % of Benchmark
*
Financials 28.5 29.5
Materials 21.5 19.0
Consumer Staples 11.4 16.0
Consumer Discretionary 11.1 6.2
Energy 7.9 8.8
Telecommunication Services 7.8 6.7
Industrials 7.0 6.2
Utilities 1.5 4.6
Information Technology 1.2 0.9
Health Care 1.1 0.6
Real Estate 1.0 1.5
----- -----
Total 100.0 100.0
----- -----
*excluding net current assets & fixed interest
Ten Largest Equity Investments (in percentage order)
Country of Risk % of % of
Company Equity Portfolio Benchmark
Vale Brazil 9.4 7.2
Itau Unibanco Brazil 7.3 6.0
Banco Bradesco Brazil 7.3 5.3
Petrobras Brazil 6.7 5.8
America Movil Mexico 6.0 5.0
Femsa Mexico 4.2 3.1
Grupo Financiero Banorte Mexico 4.0 2.6
Walmart de Mexico Mexico 3.5 2.5
B3 Brazil 3.1 1.9
Cemex SAB Mexico 2.8 1.7
Commenting on the markets, Will Landers, representing the Investment Manager
noted;
For the month of June 2018, the Company's NAV fell by 3.9%* with the share
price falling by 4.4%*. The Company's benchmark, the MSCI EM Latin America
Index, fell by 2.3%* (all performance figures are in sterling terms with income
reinvested).
The Portfolio's underweight exposure to Chile was the month's top contributor
to relative outperformance as the market broadly underperformed the region with
the Chilean Peso depreciating further against the US Dollar. Brazilian stock
selection also contributed positively although our heavy overweight position
detracted. Off-benchmark positions such as digital retailer B2W and medical
service provider Fleury, showed some resilience, ending the month in positive
territory. Given that it was the best performing country in June, our light
overweight to Mexico benefitted performance as markets and the Mexican Peso
rallied given the easing of concerns regarding the election of Andres Manuel
Lopes Obrador ("AMLO"). Defensive staples WalMart de Mexico and Arca
Continental both performed well on strong execution and resiliency through this
period of macro uncertainty. Cement manufacturer, GCC, was the month's top
contributor. On the other hand our off-benchmark position in Argentina
continued to weigh on performance despite a US$50 billion stand-by arrangement
with the IMF (International Monetary Fund) to help support the currency and
MSCI's decision to reclassify the country to Emerging Market status. Brazilian
banks, Banco Bradesco and Itau Unibanco, were among the largest detractors amid
pressure on the Real and increasing volatility on the back of approaching
presidential elections.
Most recently we increased the portfolio's overweight exposure to Brazil, while
also shifting positioning within the country. Specifically, we added to
underperforming SOEs (State Owned Enterprises) in Brazil given significant
underperformance, attractive valuation, and our continued belief that the
October election will elect a government committed to the current economic
reform process. We notably took profits from Rumo and Magazine Luiza amid
strong performance, while adding to Petrobras and Banco do Brasil on weakness.
On the other hand, we increased exposure across Mexico, moving the country
exposure from underweight to neutral, on the expectation that an eventual AMLO
administration would initially adopt market friendly policies. We also
initiated a position in Colombia, while trimming some exposure to off-benchmark
Argentina as tough fiscal and CPI (Consumer Price Index) targets associated
with the IMF Stand-By Agreement are likely to result in lower growth. The
portfolio ended the month being overweight Brazil while being underweight
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.
While Brazilian risk assets are likely to remain volatile through the election,
we will look to take opportunities while markets are down. Meanwhile, after a
landslide victory for both the presidency and in congress, all eyes remain on
how much of AMLO's campaign rhetoric will flow through into practice. Our
sentiment towards Brazil has improved as we expect a less controversial
administration in year one with a more tempered agenda. We continue to maintain
underweight portfolio exposure to Chile due to rich valuations and lack of
free-float liquidity, and have become more cautious on Peru given disappointing
growth figures. We are keeping a close eye on Argentine inflation and the
effectiveness of government measures to stabilize the currency, however at this
point we remain comfortable with our exposure and have initiated a position in
Colombia given higher oil prices, which in turn should ease fiscal concerns
Sources:
*BlackRock as at 30 June 2018
**Datastream as at 30 June 2018
17 July 2018
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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