BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 31 May 2018 and unaudited.
Performance at month end with net income reinvested
| One month % |
Three months % |
One year % |
Three years % |
Five years % | |
| Sterling: | |||||
| Net asset value^ | -13.3 | -15.0 | 2.6 | 27.5 | -5.0 |
| Share price | -14.4 | -14.6 | 0.3 | 19.9 | -8.3 |
| MSCI EM Latin America | -11.0 | -12.9 | 0.9 | 28.0 | -3.8 |
| US Dollars: | |||||
| Net asset value^ | -16.3 | -17.9 | 5.7 | 11.2 | -16.6 |
| Share price | -17.3 | -17.5 | 3.3 | 4.6 | -19.5 |
| MSCI EM Latin America | -14.0 | -15.9 | 4.0 | 11.7 | -15.5 |
^cum income
Sources: BlackRock, Standard & Poor’s Micropal
| At month end | |
| Net asset value – capital only: | 472.61p |
| Net asset value – cum income: | 477.25p |
| Share price: | 408.00p |
| Total Assets#: | £205.5m |
| Discount (share price to cum income NAV): | 14.5% |
| Average discount* over the month – cum income: | 13.3% |
| Net gearing at month end**: | 6.8% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 2.4% |
| 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.
*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 Assets | % of Equity Portfolio * | MSCI EM Latin America Index | ||
| Brazil | 65.0 | 66.7 | 57.0 | |
| Mexico | 22.0 | 22.6 | 24.4 | |
| Chile | 4.3 | 4.5 | 10.6 | |
| Argentina | 4.2 | 4.2 | 0.0 | |
| Peru | 1.9 | 2.0 | 3.8 | |
| Colombia | 0.0 | 0.0 | 4.2 | |
| Net current assets (inc. fixed interest) | 2.6 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 29.7 | 30.3 |
| Materials | 20.8 | 18.6 |
| Consumer Staples | 11.7 | 15.8 |
| Consumer Discretionary | 11.5 | 5.1 |
| Energy | 7.6 | 9.6 |
| Industrials | 6.8 | 6.0 |
| Telecommunication Services | 6.6 | 6.3 |
| Utilities | 1.8 | 5.2 |
| Health Care | 1.2 | 0.8 |
| Information Technology | 1.2 | 0.9 |
| Real Estate | 1.1 | 1.4 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ----- | ----- |
*excluding net current assets & fixed interest
Ten Largest Equity Investments (in percentage order)
Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Vale | Brazil | 9.7 | 7.5 |
| Itau Unibanco | Brazil | 7.9 | 6.5 |
| Banco Bradesco | Brazil | 7.7 | 5.8 |
| Petrobras | Brazil | 6.2 | 6.5 |
| America Movil | Mexico | 4.7 | 4.5 |
| Femsa | Mexico | 3.9 | 2.8 |
| B3 | Brazil | 3.3 | 2.1 |
| Walmart de Mexico | Mexico | 3.2 | 2.3 |
| Grupo Financiero Banorte | Mexico | 2.8 | 2.3 |
| Rumo Logistica Operada Multimodal | Brazil | 2.7 | 0.7 |
Commenting on the markets, Will Landers, representing the Investment Manager noted;
For the month of May 2018, the Company’s NAV fell by 13.3%* and the share price fell by 14.4%*. The Company’s benchmark, the MSCI EM Latin America Index, also fell by 11.0%** (all performance figures are in sterling terms with income reinvested).
Selection within Brazil and Chile were the top contributors to relative performance in May as select materials names helped buoy the portfolio amid tight commodity prices. An off-benchmark allocation to Argentina was the month’s largest detractor as higher than expected inflation and a slow policy response led to the Peso depreciating by almost 20% in two weeks. A lack of positioning in Colombia also weighed on returns as oil prices remained relatively strong for most of the month. At a stock level, Chilean copper miner, Antofagasta, was the month’s best performer. On the other hand, positions in Argentine bank, Supervielle, was among the worst performers following a run on the currency. Brazilian airline, Azul, also detracted due to a weaker Real and stronger oil prices through most of the period.
During the month, we notably took down some exposure to government sensitive Brazilian names such Petrobras and Banco do Brasil, amid increased volatility stemming from the truckers union strike and the surprise announcement from Petrobras to lower fuel prices by 10% for two weeks. Similarly we leveraged the recent sell-off in Argentina to consolidate our positioning. On the other hand we topped up our position in Chilean copper miner, Antofagasta, and have taken down some leverage.
Our positioning and outlook remain unchanged. The main driver for earnings growth in Brazil has been the economic recovery - persistently low inflation has allowed the Central Bank to continue it easing cycle, which has set the foundation for the recovery (the Central Bank cut rates another 25 bps (basis points) in February, bringing the SELIC (Sistema Especial de Liquidação e Custodia, the Brazilian Central Bank interest rate) down to 6.50%, still leaving room for another cut if inflation continues to come in below target. The reform agenda continues to be a focus, although pension reform will only be considered after October elections. Meanwhile, NAFTA (North American Free Trade Agreement) negotiations continue but appear unlikely to reach a conclusion in the short term, and uncertainties around the July election, particularly as it relates to congressional support cause us to maintain our cautious view on Mexican growth, and therefore our underweight. Chile also remains an underweight due to rich valuations and lack of free-float liquidity, and we 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.
Sources:
*BlackRock as at 31 May 2018
** Datastream as at 31 May 2018
18 June 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.
