The information contained in this release was correct as at 31
December 2020. 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
2020 and unaudited.
Performance at month end with net income reinvested
|
One
month
% |
Three
months
% |
One
year
% |
Three
years
% |
Five
years
% |
Sterling: |
|
|
|
|
|
Net asset value^ |
10.1 |
30.8 |
-17.2 |
-5.4 |
66.6 |
Share price |
11.3 |
32.9 |
-12.1 |
2.0 |
78.4 |
MSCI EM Latin America
(Net Return)^^ |
9.3 |
27.5 |
-16.5 |
-6.4 |
65.4 |
US Dollars: |
|
|
|
|
|
Net asset value^ |
12.8 |
38.3 |
-14.6 |
-4.5 |
54.4 |
Share price |
13.9 |
40.5 |
-9.3 |
3.0 |
65.3 |
MSCI EM Latin America
(Net Return)^^ |
11.9 |
34.8 |
-13.8 |
-5.4 |
53.4 |
^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. Historically the
benchmark data for the Company has always been stated on a Gross
basis. However, as disclosed in the Company’s Interim Report for
the six months ended 30 June 2018, it
is the Board’s intention to monitor the Company’s performance with
reference to the NR version of the benchmark. For transparency both
sets of benchmark data have been provided.
Sources: BlackRock, Standard & Poor’s Micropal
At month end
Net asset value - capital only: |
431.10p |
Net asset value - including
income: |
436.20p |
Share price: |
404.50p |
Total assets#: |
£183.8m |
Discount (share price to cum income
NAV): |
7.3% |
Average discount* over the month –
cum income: |
10.7% |
Net gearing at month end**: |
7.4% |
Gearing range (as a % of net
assets): |
0-25% |
Net yield##: |
4.2% |
Ordinary shares in issue(excluding
2,181,662 shares held in treasury): |
39,259,620 |
Ongoing charges***: |
1.1% |
#Total assets include current year revenue.
##The yield of 4.2% is calculated based on total dividends
declared in the last 12 months as at the date of this announcement
as set out below (totalling 23.06
cents per share) and using a share price of 552.93 US cents
per share (equivalent to the sterling price of 404.50 pence per share translated in to US cents
at the rate prevailing at 31 December
2020 of $1.36687 dollars to
£1.00).
2020 Q1 interim dividend of 4.59
cents per share (paid on 20 May
2020). 2020 Q2 interim dividend of 5.57 cents per share (paid on 11 August 2020).
2020 Q3 interim dividend of 5.45
cents per share (paid 09 November
2020).
2020 Q4 Final dividend of 7.45
cents per share (payable on 08
February 2021).
*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.
*** Calculated as a percentage of average net assets and using
expenses, excluding interest costs for the year ended 31 December 2019.
Geographic
Exposure |
% of
Total Assets |
% of Equity
Portfolio * |
MSCI EM Latin
America Index |
Brazil |
63.0 |
62.9 |
64.6 |
Mexico |
25.4 |
25.4 |
21.9 |
Chile |
8.7 |
8.7 |
6.3 |
Argentina |
3.0 |
3.0 |
1.6 |
Peru |
0.0 |
0.0 |
3.0 |
Colombia |
0.0 |
0.0 |
2.6 |
Net current liabilities (inc. fixed
interest) |
-0.1 |
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 7.3%
of the Company’s net asset value.
Sector |
% of Equity
Portfolio* |
% of
Benchmark* |
Financials |
27.0 |
25.8 |
Materials |
26.0 |
20.7 |
Energy |
9.2 |
9.7 |
Consumer Discretionary |
8.8 |
6.4 |
Industrials |
7.9 |
6.7 |
Communication
Services |
6.4 |
6.1 |
Real Estate |
3.8 |
0.9 |
Health Care |
3.7 |
2.2 |
Consumer Staples |
3.5 |
14.1 |
Information Technology |
2.0 |
1.8 |
Utilities |
1.7 |
5.6 |
|
----- |
----- |
Total |
100.0 |
100.0 |
|
===== |
===== |
*excluding net current assets & fixed interest
Company |
Country
of Risk |
% of Equity
Portfolio |
% of
Benchmark |
|
|
|
|
Petrobras: |
|
|
|
|
Brazil |
6.0 |
3.3 |
|
Brazil |
3.2 |
4.2 |
Banco Bradesco - ADR |
Brazil |
8.5 |
4.7 |
Vale - ADR |
Brazil |
8.1 |
10.0 |
B3 |
Brazil |
4.9 |
3.9 |
America Movil - ADR |
Mexico |
4.2 |
4.0 |
Grupo Mexico |
Mexico |
3.8 |
2.1 |
Walmart de Mexico y
Centroamerica |
Mexico |
3.5 |
2.4 |
Suzano |
Mexico |
3.3 |
1.4 |
Quimica Y Minera - ADR |
Chile |
3.2 |
0.9 |
Cemex |
Mexico |
3.1 |
1.3 |
|
Commenting on the markets,
Ed Kuczma and Sam Vecht, representing the Investment Manager
noted;
For the month of December 2020,
the Company’s NAV returned 10.1%1 with the share price
moving 11.3%1. The Company’s benchmark, the MSCI EM
Latin America Index, returned 9.3%1 on a net basis (all
performance figures are in sterling terms with dividends
reinvested).
Latin American (LatAm) equities performed strongly in December,
out-performing the developed and emerging markets. All LatAm
countries posted positive performance, with Brazil and Colombia leading the rise. LatAm stocks rose
on optimism over the global rollout of the COVID-19 vaccine and a
slide in the US Dollar.
Stock selection in Mexico
contributed the most to relative performance over the period, while
allocation in Colombia detracted
most from relative returns . An overweight position in Brazilian
bank, Banco Bradesco, contributed the most to relative performance
as the bank’s earnings should be positively impacted following the
improvement in the global outlook with the positive progress on
Brazil’s macro scenario. The portfolio’s lack of exposure to
the Mexican multinational beverage and retail company,
Fomento Economico Mexicano, also added to relative performance as
the stock underperformed the benchmark due to increased mobility
restrictions in Mexico.
Conversely, an off-benchmark holding in Afya, a Brazilian medical
education group, was the top detractor on a relative basis as the
stock gave back gains following a strong period of outperformance
(year to date). An overweight position in Sociedad Quimica y Minera
de Chile, a Chilean Lithium
company, also weighed on returns during December. Despite the
short-term headwind to relative performance, the stock appreciated
in value by more than 80% in 2020 and remains well positioned to be
a low-cost leader in lithium production, an industry that should
continue to see strong demand as the global expansion of the market
for electronic vehicles gains pace.
Over the month we added to the Argentinian IT and software
development company, Globant, on the back of attractive valuations
(given recent relative underperformance). We believe that the
company has earnings upside potential from a strong pipeline of
demand for its products. We initiated a position in the Brazilian
bank, Banco BTG Pactual, on expectations of strong earnings growth
relative to traditional banks (given the company’s market share
gains and the growth in asset management and wealth management
industries). We reduced exposure to the Brazilian e-commerce
company, B2W Companhia, due to pressure on market share and strong
competition. We sold our holding in the Brazilian petroleum
distributor, Petrobras Distribuidora, as we fear that the valuation
is mostly fair, based on our view of an increasingly competitive
industry and falling marginal returns. The portfolio ended
the month being overweight to Mexico and Chile, whilst being underweight to
Peru and Colombia. At the sector level, we are
overweight materials and real estate; and underweight consumer
staples and utilities.
As we have seen, COVID-19 has devastated the global economy in
2020, with LatAm hit especially hard. As we look in to 2021 we see
politics and vaccine hopes as catalysts for a reflation trade.
Despite the strong fourth quarter performance of LatAm
equities, the region remains cheaper than developed markets and
emerging markets on both a forward P/E (price to earning) basis and
trailing P/BV (price to book value) basis. We are optimistic on
returns for Latin American equities going forward, given the
prospect for low global interest rates to persist over the
medium-term, economic recovery in 2021 and anticipation of a weaker
US Dollar environment favouring LatAm currencies. Furthermore,
LatAm equities have benefited from a recent global value rotation
in the market, which we expect to continue into the new year.
Higher raw material prices should also provide a tailwind for LatAm
given the high level of commodity exports across major economies in
the region. Focusing on Brazil,
more cyclical and credit-dependent sectors appear to be recovering
faster. This sectoral dynamic suggests that the Brazillian Central
Bank’s liquidation and risk reduction measures have, thus far, not
only prevented an explosion in defaults but have also allowed banks
to cushion the negative impacts of the crisis, with credit playing
an important anti-cyclical roll. In the long-run, to consolidate
this recovery, we believe that stringent fiscal discipline is
needed to limit the fiscal legacy of emergency measures.
1Source: BlackRock, as of 31
December 2020.
27 January 2021
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.