BlackRock Latin Am Portfolio Update
September 20 2022 - 11:12AM
UK Regulatory
TIDMBRLA
The information contained in this release was correct as at 31 August 2022.
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 August 2022 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five
month months year years years
% % % % %
Sterling:
Net asset value^ 10.1 -2.2 6.0 -3.5 -2.1
Share price 7.2 -11.1 8.1 0.3 2.3
MSCI EM Latin America 7.4 -3.7 9.9 0.1 1.7
(Net Return)^^
US Dollars:
Net asset value^ 5.3 -9.7 -10.4 -7.7 -11.6
Share price 2.5 -17.9 -8.6 -4.1 -7.7
MSCI EM Latin America 2.7 -11.1 -7.1 -4.4 -8.2
(Net Return)^^
^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: 407.83p
Net asset value - including income: 428.82p
Share price: 380.50p
Total assets#: £135.4m
Discount (share price to cum income NAV): 11.3%
Average discount* over the month - cum income: 11.2%
Net gearing at month end**: 5.6%
Gearing range (as a % of net assets): 0-25%
Net yield##: 5.9%
Ordinary shares in issue(excluding 2,181,662 shares held in treasury): 29,448,641
Ongoing charges***: 1.1%
#Total assets include current year revenue.
##The yield of 5.9% is calculated based on total dividends declared in the last
12 months as at the date of this announcement as set out below (totalling 26.27
cents per share) and using a share price of 442.75 US cents per share
(equivalent to the sterling price of 380.50 pence per share translated in to US
cents at the rate prevailing at 31 August 2022 of $1.1636 dollars to £1.00).
2021 Q3 interim dividend of 6.56 cents per share (paid on 8 November 2021).
2021 Q4 Final dividend of 6.21 cents per share (paid on 08 February 2022).
2022 Q1 Interim dividend of 7.76 cents per share (paid on 16 May 2022).
2022 Q2 Interim dividend of 5.74 cents per share (paid on 12 August 2022).
*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 2021.
Geographic % of % of Equity MSCI EM Latin
Exposure Total Assets Portfolio * America Index
Brazil 62.9 63.9 64.2
Mexico 23.9 24.3 24.3
Chile 3.7 3.8 7.1
Argentina 3.2 3.2 0.0
Peru 2.6 2.6 2.7
Panama 2.2 2.2 0.0
Colombia 0.0 0.0 1.7
Net current assets (inc. 1.5 0.0 0.0
fixed interest)
----- ----- -----
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 7.1% of the Company's net asset value.
Sector % of Equity Portfolio % of Benchmark*
*
Financials 28.2 24.6
Materials 18.0 20.5
Consumer Staples 13.1 14.3
Energy 11.1 13.8
Industrials 9.4 7.9
Real Estate 5.9 0.6
Health Care 4.9 2.4
Consumer Discretionary 4.0 2.9
Communication Services 2.7 6.4
Information Technology 1.8 0.4
Utilities 0.9 6.2
----- -----
Total 100.0 100.0
===== =====
*excluding net current assets & fixed interest
Country % of % of
Company of Risk Equity Benchmark
Portfolio
Petrobrás - ADR: Brazil
Equity 5.8 5.0
Preference Shares 3.9 5.7
Vale - ADS Brazil 7.1 9.3
Banco Bradesco - ADR Brazil 6.5 4.6
Itaú Unibanco - ADR Brazil 6.3 4.5
Grupo Financiero Banorte Mexico 4.5 2.9
AmBev - ADR Brazil 4.3 2.6
B3 Brazil 4.1 2.6
FEMSA - ADR Mexico 4.1 2.3
Hapvida Participacoes Brazil 3.4 1.2
Suzano Papel e Celulose Brazil 2.7 1.2
Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the
Investment Manager noted;
For the month of August 2022, the Company's NAV returned 10.1%1 with the share
price increasing by 7.2%1. The Company's benchmark, the MSCI EM Latin America
Index, returned 7.4%1 on a net basis (all performance figures are in sterling
terms with dividends reinvested).
Latin American (LatAm) equities posted a positive performance over the month
with Brazil and Chile leading the rise.
Security selection in Mexico and Brazil contributed most to relative
performance over the period. Our overweight position in Brazilian healthcare
company, Hapvida, was the top contributor to the portfolio after posting
positive 2Q22 earnings results. The company is gaining health care patients at
a faster pace than peers due to its newly launched national plan and is seeing
improving operating trends and margins as a result.. An off-benchmark position
in Brazilian logistics company, Santos Brasil, also benefitted the portfolio as
the company has performed well on the back of contract renegotiations and high
utilization rates. On the other hand, our underweight position in Brazilian
petroleum company, Petrobras, detracted most from relative performance as the
company posted positive 2Q22 earnings results. Our off-benchmark position in XP
Inc., a Brazilian investment management company, also weighed on relative
returns as the company has recently been negatively impacted by a jump in
expenses and investments in new projects.
Over the month we added to the Mexican beverages and retail company, Femsa, as
in our opinion the share price has been overly penalized for a debatable
capital allocation decision, which overshadows a strong operating environment
at its core convenience store business (Oxxo). The latter is recovering nicely
as mobility in Mexico keeps improving every month, which we believe will result
in further operating leverage. We reduced exposure to Mexican real estate
investment trust company, Fibra Uno, as we have been somewhat disappointed by
the degree to which it has been able to pass on cost inflation through to
rents for its office and retail assets. We sold our holding of the Brazilian
telecommunications company, TIM, as we expect to see underperformance within
the telecommunications sector.
The fundamentals around Latin American equities have steadily improved from a
challenging 2021 as investors learn to live with the region's political risk
and focus instead on soaring local interest rates and commodity prices. Latin
America currencies remains relatively cheap at current levels as the
combination of rising interest rates and low valuations has been attracting
investors to increase regional exposure. Central banks in the region were the
first to raise rates last year and policy makers have surprised markets with
steep hikes this year. For example, Brazilian policy makers have increased
borrowing costs to the highest levels in almost five years. As a result, Latin
America has been proactive in hiking rates and is considered to be ahead of the
curve from a monetary policy standpoint relative to developed markets. From a
positioning standpoint, we have been favoring domestic stocks that are more
sensitive to interest rates in Brazil, on the view that the nation's next
president is likely to implement relatively orthodox macro policies and the
Brazilian Central Bank should start an easing cycle in 2023. Although there are
some uncertainties ahead of the October Brazilian Presidential election, global
investors seem to be ready to put money to work in local Latin American equity
markets as other emerging-market nations such as China, Russia -and India
grapple with their own issues. We would argue that for many reasons LatAm
would seem well-positioned ahead of rising geopolitical tensions as the region
provides: i) geographic and economic insulation from the recent conflict; ii)
long and wide commodities exposure; iii) cheap currencies; iv) attractive
valuation entry points; and v) proactive monetary policy stances.
1Source: BlackRock, as of 31 August 2022.
20 September 2022
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.
END
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