BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 28 February 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^ | 0.2 | 14.0 | 13.8 | 41.3 | 4.1 |
| Share price | -3.0 | 10.5 | 12.6 | 39.1 | 3.1 |
| MSCI EM Latin America | -0.5 | 12.1 | 9.7 | 41.3 | 2.8 |
| US Dollars: | |||||
| Net asset value^ | -2.9 | 16.0 | 26.1 | 26.0 | -5.4 |
| Share price | -6.0 | 12.4 | 24.7 | 24.0 | -6.3 |
| MSCI EM Latin America | -3.6 | 14.1 | 21.5 | 26.0 | -6.7 |
^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: | 559.51p |
| Net asset value - cum income: | 566.95p |
| Share price: | 483.00p |
| Total Assets#: | £240.5m |
| Discount (share price to cum income NAV): | 14.8% |
| Average discount* over the month - cum income: | 13.5% |
| Net gearing at month end**: | 7.6% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 2.0% |
| Ordinary shares in issue***: | 39,369,620 |
| 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 2,071,662 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 2017.
Geographic Exposure
| % of Total Assets | % of Equity Portfolio * | MSCI EM Latin American Index | ||
| Brazil | 67.3 | 67.3 | 60.5 | |
| Mexico | 22.1 | 22.2 | 22.9 | |
| Argentina | 5.1 | 5.1 | 0.0 | |
| Chile | 2.7 | 2.7 | 10.1 | |
| Peru | 2.7 | 2.7 | 3.2 | |
| Colombia | 0.0 | 0.0 | 3.3 | |
| Net current assets (inc. Fixed interest) | 0.1 | 0.0 | 0.0 | |
| ----- | ----- | ----- | ||
| Total | 100.0 | 100.0 | 100.0 | |
| ----- | ----- | ----- |
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 30.7 | 31.5 |
| Materials | 16.6 | 16.4 |
| Consumer Staples | 12.6 | 15.5 |
| Consumer Discretionary | 12.0 | 5.0 |
| Energy | 10.5 | 10.0 |
| Telecommunication Services | 7.2 | 6.3 |
| Industrials | 5.7 | 6.0 |
| Utilities | 2.3 | 5.7 |
| Real Estate | 1.2 | 1.3 |
| Health Care | 0.8 | 1.0 |
| Information Technology | 0.4 | 1.3 |
| ----- | ----- | |
| 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 |
| Itau Unibanco | Brazil | 8.7 | 7.2 |
| Vale | Brazil | 8.3 | 6.3 |
| Petrobras | Brazil | 7.9 | 6.8 |
| Banco Bradesco | Brazil | 6.7 | 6.7 |
| America Movil | Mexico | 5.4 | 4.5 |
| AmBev | Brazil | 4.8 | 4.6 |
| Femsa | Mexico | 3.5 | 2.6 |
| B3 | Brazil | 3.1 | 2.3 |
| Rumo Logistica Operada Multimodal | Brazil | 2.6 | 0.7 |
| Grupo Financiero Banorte | Mexico | 2.5 | 2.2 |
Commenting on the markets, Will Landers, representing the Investment Manager noted;
For the month of February 2018, the Company's NAV rose by 0.2%* with the share price falling 3.0%*. The Company's benchmark, the MSCI EM Latin America Index, fell by 0.5%* (all performance figures are in sterling terms with income reinvested).
Brazil was the area of strength for the Company as the materials and energy sectors helped to offset broader weakness across more domestically focused sectors. Vale and Petrobras were among the top contributors on the back of strong results and positive sentiment surrounding the ongoing transfer of rights negotiation, respectively. Steel producer, Gerdau, also performed well amid improving pricing power and a recovery in domestic demand. Mexican stock selection also benefitted the Trust in February. Our lack of positioning in media name, Televisa was the top contributor to relative performance after reporting weak numbers with poor forward looking expectations. On the other hand our off-benchmark positioning in Argentina weighed on returns. However, detractors in February were primarily stock-specific in nature. Mexico cement manufacturer, Cemex, and Brazilian retailer, Lojas Renner, were among the names that weighed on performance after missing fourth quarter earnings expectations.
During the month we took down some risk in Mexico given our concerns with the July presidential election - we reduced exposure to both Grupo Mexico and Cemex. We also exited our position in airport operator, GAP, amid declining commercial revenues and increasing operating costs. On the other hand we increased exposure to Brazilian banks on improving 2018 guidance and an expected uptick in loan growth, adding to existing positions in Itau and Banco do Brasil. We also increased our exposure to copper on more positive pricing dynamics for the sector, initiating a position in Antofagasta. The Company ended the month being overweight Brazil, while being underweight Chile and Colombia. We also maintain an off-benchmark allocation to Argentina. At the sector level, we are overweight the domestic consumer and energy, while being underweight utilities and industrials.
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 in February, bringing the SELIC (Sistema Especial de Liquidacão e Custodia, the Brazilian Central Bank interest rate) down to 6.75%, 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, uncertainties around the July election cause us to maintain our cautious view on Mexican growth, and therefore our underweight. We continue to underweight Chile due to rich valuations and lack of free-float liquidity, and have become more cautious on Peru given disappointing growth figures. We continue to favour Argentina as that economy continues on its recovery path.
*Source: BlackRock as of 28 February 2018
20 March 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.
