BlackRock Latin Am Portfolio Update
July 24 2017 - 11:56AM
UK Regulatory
TIDMBRLA
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 30 June 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five ^^Since
month months year years years 31.03.06
% % % % % %
Sterling:
Net asset value^ 0.5 -5.7 16.7 5.2 3.1 75.1
Share price -1.8 -6.0 16.8 1.3 -0.6 61.0
MSCI EM Latin America 0.1 -5.3 18.8 8.2 1.2 92.5
US Dollars:
Net asset value^ 1.1 -2.0 13.4 -20.1 -14.5 31.3
Share price -1.2 -2.4 13.4 -23.1 -17.6 20.7
MSCI EM Latin America 0.7 -1.6 15.4 -17.8 -16.2 44.2
^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: 470.18p
Net asset value - cum income: 475.71p
Share price: 407.75p
Total Assets#: GBP197.0m
Discount (share price to cum income NAV): 14.3%
Average discount* over the month - cum income: 13.1%
Net gearing at month end**: 4.8%
Gearing range (as a % of net assets): 0-25%
Net yield##: 2.9%
Ordinary shares in issue***: 39,369,620
Ongoing charges****: 1.2%
#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
2016.
Geographic Exposure
% of Total % of Equity MSCI EM Latin
Assets Portfolio * American Index
Brazil 62.3 62.6 54.0
Mexico 27.9 28.0 30.0
Peru 3.8 3.8 3.0
Argentina 3.1 3.1 0.0
Chile 1.6 1.6 9.3
Panama 0.5 0.5 0.0
Colombia 0.4 0.4 3.7
Net current assets 0.4 0.0 0.0
(inc.Fixed interest)
----- ----- -----
Total 100.0 100.0 100.0
----- ----- -----
Sector % of Equity Portfolio % of Benchmark
*
Financials 30.0 30.0
Consumer Staples 20.4 17.6
Materials 15.1 15.0
Energy 9.6 7.6
Consumer Discretionary 8.3 6.0
Industrials 6.6 6.7
Telecommunication Services 5.4 6.5
Utilities 2.1 6.3
Real Estate 1.5 1.7
Information Technology 1.0 1.6
Health Care 0.0 1.0
----- -----
Total 100.0 100.0
----- -----
*excluding net current liabilities & fixed interest
Ten Largest Equity Investments (in percentage order)
Country of % of % of
Company Risk Equity Portfolio Benchmark
Itau Unibanco Brazil 7.8 6.2
Petrobras Brazil 6.9 4.6
Vale Brazil 6.0 4.7
Banco Bradesco Brazil 5.6 5.9
Femsa Mexico 4.4 3.3
BM&F Bovespa Brazil 4.0 2.1
AmBev Brazil 3.9 4.5
Grupo Financiero Banorte Mexico 3.6 2.8
America Movil Mexico 3.4 4.7
Cemex Colombia 2.9 2.4
Commenting on the markets, Will Landers, representing the Investment Manager
noted;
For the month of June 2017, the Company's NAV rose by 0.5% with the share price
falling by 1.8%. The Company's benchmark, the MSCI EM Latin America Index, rose
by 0.1% (all performance figures are in sterling terms with income reinvested
and are net of ongoing charges).
Brazilian stock selection was the month's top contributor to performance as our
holdings outperformed the Brazilian market which was buffeted by the political
scandals surrounding President Temer. Brazil's leading financial exchange, BM&F
Bovespa, as well as iron producer, Vale, were among the top contributors; Vale
gained on optimism surrounding new leadership and the recent approval of a
share conversion plan that should boost investor transparency and give equal
votes to all shares. Mexican selection also benefitted the Company as the
broader market advanced, supported by positive political news with the market
friendly PRI (Institutional Revolutionary Party) winning a narrow victory in
the state of Mexico and inflation showing signs of peaking. However, our
relative underweight neutralized much of the stock specific gains. Our
off-benchmark allocation to Argentina was the month's primary detractor as MSCI
unexpectedly announced the postponement of their decision to reclassify the
country to 'emerging market', citing the need to monitor the persistence of
recently implemented market accessibility improvements. Whilst this result may
be a disappointment to some market participants, we would remind investors of
the substantial positive macro-economic changes that Argentina has witnessed
over recent years. We believe that it is still a compelling investment
destination for long-term investors and have been looking to selectively add
exposure on weakness. Energy names Petrobras and YPF were the top individual
detractors, also being negatively impacted by oil weakness.
During the quarter, we were actively trading around news and sentiment in
Brazil. We notably trimmed our Brazilian overweight following headlines
implicating President Temer in corruption wrongdoing in May, specifically
reducing exposure to Petrobras and Bradesco. We've since added back exposure,
initiating positions in domestic retailer Lojas Renner, and low-income home
builder MRV, in part on the expectation that we will see continuity in the
economic team and reform process, regardless of President Temer's political
status. We also added exposure across our Mexican positions, though we remain
cautious of the market as the domestic political landscape remains relatively
challenged, and could impact broader investor sentiment as we head deeper into
the 2018 election season.
As we enter the third quarter, our positioning and outlook remain relatively
unchanged. We continue to be overweight Brazil, Peru and off-benchmark
Argentina, while being underweight Chile, Colombia and Mexico. In the near
term, negative sentiment concerning another potential presidential scandal has
reversed the green shoots seen over the last couple of months in Brazil and has
put President Temer's term and reform agenda into question. Despite weaker
market confidence on the General Prosecutor's decision to charge President
Temer with passive corruption, we expect a scenario whereby continuity of the
economic plan started by President Temer persists. As such the primary drivers
for Brazilian equities should remain the same: a) the continued easing cycle
(albeit at a slower pace) by the Central Bank which should help to bring
forward the needed economic recovery; and b) progress on the reform agenda,
especially labor reform, with pension reform potentially being passed in the
second half of the year, bringing stability to government accounts in the
medium term. Once the latter passes, we believe that this will open the door
for the Central Bank to bring the easing cycle further forward and potentially
bring rates lower than market expectations. Meanwhile, despite a more
conciliatory tone from the US government on the trade front, we maintain our
cautious view on Mexican growth, and therefore our underweight (despite a PRI
win in the gubernatorial election in the state of Mexico in early June, results
were not conclusive as to the likelihood of a MORENA (National Regeneration
Movement) victory in next year's presidential elections). We continue to be
underweight in Chile due to rich valuations and lack of free-float liquidity,
and despite slower than expected progress on the infrastructure front, we
continue to favour Peru among its Andean neighbours. Argentina remains another
top focus for the strategy as fundamentals persist, with the recent correction
providing a positive entry point for longer-term investments.
24 July 2017
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.
END
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