Yahoo Finance BlackRock Latin American Investment Trust Plc - Portfolio Update
The information contained in this release was correct as at 31 January 2024. 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 January 2024 and unaudited.
Performance at month end with net income reinvested
|
One
|
Three
|
One
|
Three
|
Five
|
Sterling:
|
|
|
|
|
|
Net asset value^
|
-7.2
|
11.2
|
12.4
|
37.6
|
7.1
|
Share price
|
-7.6
|
15.1
|
12.4
|
33.1
|
16.6
|
MSCI EM Latin America
|
-4.7
|
12.0
|
11.2
|
46.2
|
15.1
|
US Dollars:
|
|
|
|
|
|
Net asset value^
|
-7.3
|
16.7
|
16.2
|
27.7
|
3.7
|
Share price
|
-7.7
|
20.8
|
16.2
|
23.4
|
12.9
|
MSCI EM Latin America
|
-4.8
|
17.5
|
15.0
|
35.6
|
11.4
|
^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.
Sources: BlackRock, Standard & Poor’s Micropal
At month end
Net asset value - capital only:
|
460.09p
|
Net asset value - including income:
|
463.13p
|
Share price:
|
407.00p
|
Total assets#:
|
£143.5m
|
Discount (share price to cum income NAV):
|
12.1%
|
Average discount* over the month – cum income:
|
9.6%
|
Net Gearing at month end**:
|
5.3%
|
Gearing range (as a % of net assets):
|
0-25%
|
Net yield##:
|
5.6%
|
Ordinary shares in issue(excluding 2,181,662 shares held in treasury):
|
29,448,641
|
Ongoing charges***:
|
1.13%
|
#Total assets include current year revenue.
##The yield of 5.6% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 28.82 cents per share) and using a share price of 518.29 US cents per share (equivalent to the sterling price of 407.00 pence per share translated in to US cents at the rate prevailing at 31 January 2024 of $1.273 dollars to £1.00).
2023 Q1 Interim dividend of 6.21 cents per share (Paid on 16 May 2023)
2023 Q2 Interim dividend of 7.54 cents per share (Paid on 11 August 2023)
2023 Q3 Interim dividend of 7.02 cents per share (Paid on 09 November 2023)
2024 Q4 Interim dividend of 8.05 cents per share (Paid on 09 February 2024).
*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.
*** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for the year ended 31 December 2023.
Geographic Exposure
|
% of Total Assets
|
% of Equity Portfolio *
|
MSCI EM Latin America Index
|
Brazil
|
58.8
|
58.7
|
60.6
|
Mexico
|
27.9
|
27.9
|
30.0
|
Chile
|
4.7
|
4.7
|
5.0
|
Argentina
|
2.9
|
2.9
|
0.0
|
Colombia
|
2.6
|
2.6
|
1.2
|
Panama
|
1.6
|
1.6
|
0.0
|
Multi-Country
|
1.6
|
1.6
|
0.0
|
Peru
|
0.0
|
0.0
|
3.2
|
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 5.2% of the Company’s net asset value.
Sector
|
% of Equity Portfolio*
|
% of Benchmark*
|
Financials
|
21.8
|
26.0
|
Consumer Staples
|
19.1
|
16.5
|
Materials
|
16.6
|
17.4
|
Industrials
|
11.0
|
10.0
|
Energy
|
10.9
|
14.0
|
Consumer Discretionary
|
10.4
|
1.9
|
Health Care
|
3.9
|
1.5
|
Real Estate
|
2.7
|
1.2
|
Communication Services
|
2.0
|
4.1
|
Information Technology
|
1.6
|
0.5
|
Utilites
|
0.0
|
6.9
|
|
-----
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-----
|
Total
|
100.0
|
100.0
|
|
=====
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=====
|
|
|
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*excluding net current assets & fixed interest
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Country of Risk
|
% of
|
% of
|
Petrobrás:
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Brazil
|
|
|
Equity
|
|
2.2
|
|
Equity ADR
|
|
3.9
|
5.0
|
Preference Shares ADR
|
|
3.5
|
6.1
|
Vale – ADS
|
Brazil
|
9.0
|
7.3
|
Walmart de México y Centroamérica
|
Mexico
|
6.1
|
3.4
|
Banco Bradesco:
|
Brazil
|
|
|
Equity ADR
|
|
4.2
|
0.7
|
Preference Shares
|
|
1.6
|
2.6
|
FEMSA - ADR
|
Mexico
|
4.7
|
4.2
|
B3
|
Brazil
|
4.2
|
2.4
|
AmBev:
|
|
|
|
Equity
|
Brazil
|
0.8
|
|
Equity ADR
|
Brazil
|
3.3
|
4.7
|
Grupo Aeroportuario del Pacifico – ADS
|
Mexico
|
3.8
|
1.0
|
Itaú Unibanco – ADR
|
Brazil
|
3.7
|
5.1
|
Grupo Financiero Banorte
|
Mexico
|
3.3
|
4.2
|
| |||
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the Investment Manager noted;
The Company’s NAV fell -7.2% in January, underperforming the benchmark, MSCI Emerging Markets Latin America Index, which declined -4.7% on a net basis over the same period. All performance figures are in sterling terms with dividends reinvested.
Latin America struggled in January, with all markets down except Colombia (+1.9%). Chile was the weakest market as metals prices declined and the pace of interest rate cuts was slower than expected. This was similar across other Latin American countries such as Brazil (MSCI Brazil -5.9%). The key driver of markets during the month has been the strong economic data in the US, which has pushed out expectations of the first US rate cut. This has dampened the sentiment for Emerging Markets, including Latin America, and has been a significant headwind for our positioning in rate-sensitive domestic stocks in the region.
At the portfolio level, our off-benchmark holding in an Ecuadorian gold miner was the key contributor to performance, alongside our position in Colombian Financials. On the other hand, stock selection in the Consumer Discretionary space in Brazil was the biggest drag on performance. Security selection within the Mexican Materials sector also hurt returns.
From a security lens, having no exposure to Brazilian car rental company, Localiza, and Brazilian electric equipment firm, WEG, were the two biggest contributors to relative returns. Both companies declined due to anticipated operational challenges in their specific segments. They were also affected by the overall downturn in the Brazilian market, driven by expectations of rate cuts being pushed out in the US. Overweight position in Soma, the Brazilian fashion retailer was another contributor to performance as the stock rose following news of a merger with Arezzo, a footwear retailer in Brazil. Elsewhere, Colombian exposure through bank, Bancolombia, also did well.
On the flipside, Chilean lithium producer, SQM, detracted. Lithium prices continue to struggle due to oversupply, but we believe that they have reached cash cost support levels, which should lead to supply curtailments. In addition, SQM faced disruptions in its operations due to roadblocks caused by local community protests, which have now been resolved. Brazilian real estate developer, Ez Tec, was another detractor on the back of weak operating results. An overweight position in truck leasing company, Vamos, also weighed on returns over the month.
Over the course of January, we made few changes to the portfolio. We rotated some of our Brazilian exposure by reducing our position in digital payments company, Pagseuro, and adding to our holding in Ez tec, based on relative performance. We also added to our holding in Brazilian iron ore producer, Vale, as both the stock and iron ore prices have come off. We are also positive on the company’s ability to deliver decent results as seasonally higher volumes should help on cost dilution. Elsewhere, we initiated a position in Lundin Gold, a high-quality gold mining company with operations in Ecuador as the stock trades on an attractive free cash flow yield. In Mexico, we took profits and reduced our holding in convenience store operator, FEMSA, as our investment case has largely played out.
Argentina continues to the be largest portfolio overweight, driven by two off-benchmark holdings (with no exposure to domestic Argentina). Multi-Country appears as our second largest overweight, due to our newly initiated holding in Lundin Gold, a Canadian based mining company with operations in Ecuador. On the other hand, we remain underweight in Peru due to its political and economic uncertainty. The second largest portfolio underweight is Mexico.
Outlook
We remain optimistic about the outlook for Latin America. Central banks have been proactive in increasing interest rates to help control inflation, which has fallen significantly across the region. As such we have started to see central banks beginning to lower interest rates, which should support both economic activity and asset prices. In addition, the whole region is benefitting from being relatively isolated from global geopolitical conflicts. We believe that this will lead to both an increase in foreign direct investment and an increase in allocation from investors across the region.
Brazil is the showcase of this thesis - with the central bank cutting the policy rate considerably. We anticipate further reductions, particularly if the Federal Reserve ceases its own rate hikes. The government’s fiscal framework being more orthodox than market expectations has helped to reduce uncertainty regarding the fiscal outlook and was key for confidence. We expect further upside to the equity market in the next 12-18 months as local capital starts flowing into the market.
We remain positive on the outlook for the Mexican economy as it is a key beneficiary of the friend-shoring of global supply chains. Mexico remains defensive as both fiscal and the current accounts are in order. While our view remains positive, we have taken profits after a strong relative performance, solely because we see even more upside in other Latin American markets such as Brazil. We also note that the Mexican economy will be relatively more sensitive to a potential slowdown in economic activity in the United States.
We continue to closely monitor the political and economic situation in Argentina, after libertarian Javier Milei unexpectedly won the presidential elections in November. Milei is facing a very difficult situation, with inflation above 200% year-on-year, FX reserves depleted and multiple economic imbalances. To further gauge sentiment on the ground, we travelled to the country in January. The trip further instilled our cautious view on the economic outlook for the country, and we see no fundamental reasons as to why we would want to buy this market now.
We acknowledge the strengths of the data in the United States, but we believe that, ultimately, the domestic economic outlook in the Latin American countries will be the key driver of local interest rates. We therefore maintain conviction in the funds positioning in rate-sensitive domestic stocks.
1Source: BlackRock, as of 31 January 2024.
21 February 2024
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.
