BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI:
UK9OG5Q0CYUDFGRX4151)
All information is at 31 October
2019 and unaudited.
Performance at month end with net income
reinvested
|
One
month
% |
Three
months
% |
One
year
% |
Three
years
% |
Five
years
% |
Sterling: |
|
|
|
|
|
Net asset value^ |
1.0 |
-9.8 |
5.1 |
10.4 |
24.6 |
Share price |
0.3 |
-13.7 |
10.5 |
14.1 |
25.9 |
MSCI EM Latin America
(Net Return)^^ |
-0.5 |
-6.8 |
6.4 |
9.2 |
24.3 |
US Dollars: |
|
|
|
|
|
Net asset value^ |
6.1 |
-4.6 |
6.4 |
16.9 |
0.8 |
Share price |
5.4 |
-8.8 |
11.9 |
20.9 |
1.7 |
MSCI EM Latin America
(Net Return)^^ |
4.5 |
-1.5 |
7.7 |
15.8 |
0.6 |
^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.
Sources: BlackRock, Standard & Poor’s Micropal
At month
end |
|
Net asset value –
capital only: |
519.50p |
Net asset value – cum
income: |
520.11p |
Share price: |
456.00p |
Total Assets#: |
£226.2m |
Discount (share price
to cum income NAV): |
12.3% |
Average discount* over
the month – cum income: |
12.8% |
Net gearing at month
end**: |
11.3% |
Gearing range (as a %
of net assets): |
0-25% |
Net yield##: |
5.8% |
Ordinary shares in
issue (excluding 2,181,662 shares held in treasury): |
39,259,620 |
Ongoing
charges***: |
1.0% |
#Total assets include current year revenue.
##The yield of 5.7% is calculated based on total dividends
declared in the last 12 months as at the date of this announcement
as set out below (totalling 33.87
cents per share) and using a share price of 590.06 US cents
per share (equivalent to the sterling price of 456.00 pence per share translated in to US cents
at the rate prevailing at 31 October
2019 of $1.294 dollars to
£1.00).
2018 Q4 interim dividend of 8.13
cents per share (paid on 8 February
2019)
2019 Q1 interim dividend of 8.56
cents per share (paid on 17 May
2019).
2019 Q2 interim dividend of 9.15
cents per share (paid on 16 August
2019).
2019 Q3 interim dividend of 8.03
cents per share (ex-date 10 October and payable on
08 November 2019).
*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 2018.
Geographic
Exposure |
% of
Total Assets^ |
% of
Equity Portfolio * |
|
MSCI
EM Latin America Index |
Brazil |
66.1 |
65.9 |
|
64.1 |
Mexico |
24.4 |
24.3 |
|
20.8 |
Argentina |
4.2 |
4.2 |
|
1.4 |
Colombia |
2.4 |
2.4 |
|
3.5 |
Panama |
1.2 |
1.2 |
|
0.0 |
Peru |
1.2 |
1.2 |
|
3.1 |
Chile |
0.9 |
0.8 |
|
7.1 |
Net current
liabilities (inc. fixed interest) |
-0.4 |
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 liabilities figure shown
in the table above therefore excludes bank overdrafts equivalent to
10.8% of the Company’s net asset value.
Sector |
% of
Equity Portfolio * |
% of
Benchmark |
Financials |
26.8 |
33.7 |
Energy |
14.0 |
10.8 |
Consumer Staples |
13.9 |
14.9 |
Materials |
10.4 |
12.7 |
Industrials |
10.3 |
6.4 |
Utilities |
5.4 |
5.8 |
Consumer
Discretionary |
5.3 |
5.7 |
Real Estate |
4.9 |
1.5 |
Communication
Services |
4.5 |
6.5 |
Health Care |
3.2 |
1.3 |
Information
Technology |
1.3 |
0.7 |
|
----- |
----- |
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 |
Petrobras |
Brazil |
10.4 |
8.4 |
Itau Unibanco |
Brazil |
7.5 |
6.5 |
Banco Bradesco |
Brazil |
5.7 |
6.8 |
Banco do Brasil |
Brazil |
4.1 |
1.5 |
America Movil |
Mexico |
4.0 |
4.0 |
FEMSA |
Mexico |
3.7 |
2.6 |
Grupo Financiero
Banorte |
Mexico |
3.6 |
2.1 |
Walmart de Mexico y
Centroamerica |
Mexico |
3.5 |
2.4 |
B3 |
Brazil |
3.3 |
3.7 |
Rumo Logística
Operadora Multimodal |
Brazil |
2.9 |
0.9 |
Commenting on the markets,
Ed Kuczma and Sam Vecht, representing the Investment Manager
noted;
For the month of October 2019, the
Company’s NAV returned +1.0%1 with the share price
increasing marginally by 0.3%1. The Company’s benchmark,
the MSCI EM Latin America Index, returned -0.5%1 (net
basis) (all performance figures are in sterling terms with
dividends reinvested).
In Brazil, the approval of the
pension reform in October, one of the greatest political and
economic achievements in the country in recent years, was largely
responsible for driving the stock market higher during the month.
The Brazilian Central Bank reducing benchmark interest rates by
50bps, to an all-time low, provided further tailwind for Brazilian
equities and prospects for future economic growth. Mexican markets
also climbed higher, whilst Chile
was the notable underperformer this month as social unrest and
demonstrations put pressure on the government to release a social
package and reshuffle its cabinet. Argentina reacted negatively to the arrival of
Peronist leader, Alberto Fernandez,
at the presidency following October’s election. The portfolio’s
underweight positioning in Chile
was the largest contributor to returns in the month, while Mexican
stock selection weighed on relative performance in October.
The absence of JBS , the largest meat processing company in the
world, in our portfolio was the month’s top relative contributor as
the stock declined on the back of a US senators’ letter requesting
the US Committee on Foreign Investment launch a probe in to the
company’s engagement in illicit financial activities. Overweight
positioning in the Brazilian petroleum company, Petrobras, was also
among the top contributors as the stock rose after strong third
quarter 2019 results. A lack of positioning in Magazine Luiza, one
of the largest Brazilian retail companies, was the largest
detractor over the month as the company reported better than
expected results and strong top line growth with sequential
acceleration. We do not hold the stock as we view it as being
overvalued relative to the other e-commerce retail companies in
Brazil. Overweight positioning in
Ambev, a Brazilian brewing company, also weighed on returns during
the month as the stock missed earnings results on the back of lower
beer volumes in Brazil resulting
from a price increase early in the quarter, which their competitor
did not follow, and a challenging macro environment.
Over the month, we reduced our position in Ambev following
weaker than expected results. Increasing competition and slower
volume growth has led to margin contraction. This has led us to
conclude that the stock is trading at above average valuation
multiples considering a below average earnings expansion power.
Following strong outperformance during the year, we took profit
from a position in Localiza, a Brazilian car rental company, as we
believe the sector is at risk of adding too much capacity which
could result in an erosion of returns during a period where the
stock is trading at peak valuation multiples. Furthermore, we
reduced country exposure to Chile
by selling Antofagasta, which owns
and operates copper mines, and traded into Southern Copper, a
Peruvian mining company, to maintain copper exposure. In addition,
we added to Light, a Brazilian electricity generator and
distributor, as we see structural improvements to the investment
case stemming from improvements in the company’s balance sheet, the
introduction of new management and an enhanced focus on corporate
governance. The portfolio ended the month maintaining overweight
positions in Brazil and
Mexico, while being underweight
Chile, Colombia and Peru. We also maintain an off-benchmark
allocation to Panama. At the
sector level, we are overweight healthcare and energy and are
underweight materials and financials.
Brazil continues to display a
constructive environment in congress to advance President
Jair Bolsonaro’s ambitious set of
fiscal and administrative reforms. We maintain the view that
Brazil is on the path of modest
economic recovery backed by structural tailwinds including an
uptick in private investment, a significant increase in oil
production and increased formal job creation. In Mexico, economic growth has grinded to a halt
as the private sector has reigned in investment in response to
President Lopez Obrador’s uncertain
policy initiatives. We see equity valuations in Mexico trading at multi-year lows, reflecting
lower growth environment and look towards easing monetary policy,
and eventual approval of USMCA (United
States-Mexico-Canada) trade agreement in North America and the launch of a national
infrastructure plan as catalysts to improve business sentiment. In
Peru, we are underweight as we see
negative political newsflow as President Vizcarra’s initiatives to
dissolve Congress continues to result in further political
uncertainty, leading to reduced business confidence. The portfolio
has recently reduced its underweight position in Colombia as valuations and economic stability
has led to intriguing investment opportunities. Argentina’s
presidential transition continues to present uncertainty and we
look to take advantage of opportunities arising from volatility and
extreme pessimism in the near term. Finally, we remain comfortable
with an underweight position in Chile amidst a background of protests related
to social inequality and signs of economic growth deceleration in
the economy. While the political landscape in Latin America continues to present both
opportunities and challenges in equity markets, we are encouraged
as the external environment appears to support asset prices due to
reduction in trade tensions between the US and China and global coordination to maintain low
interest rates, supporting economic expansion.
1Source: BlackRock as of 31
October 2019.
21 November 2019
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.