BlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, May 18
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 30 April 2020 and unaudited.
Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | 5.7 | -39.7 | -38.1 | -29.0 | -14.3 |
| Share price | 0.6 | -41.3 | -37.7 | -23.1 | -9.8 |
| MSCI EM Latin America (Net Return)^^ | 4.5 | -36.0 | -35.2 | -28.1 | -13.3 |
| US Dollars: | |||||
| Net asset value^ | 7.6 | -42.3 | -40.1 | -30.8 | -29.7 |
| Share price | 2.3 | -43.8 | -39.7 | -25.1 | -26.0 |
| MSCI EM Latin America (Net Return)^^ | 6.3 | -38.8 | -37.3 | -29.9 | -28.9 |
^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: | 309.30p |
| Net asset value - cum income: | 309.34p |
| Share price: | 283.00p |
| Total Assets#: | £131.4m |
| Discount (share price to cum income NAV): | 8.5% |
| Average discount* over the month - cum income: | 7.6% |
| Net gearing at month end**: | 6.3% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 8.6% |
| Ordinary shares in issue (excluding 2,181,662 shares held in treasury): | 39,259,620 |
| Ongoing charges***: | 1.1% |
Total assets include current year revenue.
#The yield of 8.7% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 30.92 cents per share) and using a share price of 356.96 US cents per share (equivalent to the sterling price of 283.00 pence per share translated in to US cents at the rate prevailing at 30 April 2020 of $1.26135 dollars to £1.00).
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 (paid on 8 November 2019).
2019 Q4 Final dividend of 9.15 cents per share (paid on 06 February 2020).
2020 Q1 interim dividend of 4.59 cents per share (payable on 20 May 2020).
*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 2019.
| Geographic Exposure | % of Total Assets^ | % of Equity Portfolio * | MSCI EM Latin America Index | |
| Brazil | 64.4 | 65.6 | 60.2 | |
| Mexico | 22.9 | 23.4 | 23.2 | |
| Argentina | 4.6 | 4.7 | 1.7 | |
| Chile | 2.9 | 3.0 | 8.5 | |
| Peru | 1.4 | 1.5 | 3.5 | |
| Panama | 1.0 | 1.0 | ||
| Colombia | 0.9 | 0.8 | 2.9 | |
| Net current assets(inc. fixed interest) | 1.9 | 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 8.2% of the Company's net asset value.
| Sector | % of Equity Portfolio * | % of Benchmark |
| Financials | 26.8 | 28.0 |
| Consumer Discretionary | 16.0 | 6.4 |
| Materials | 12.0 | 14.7 |
| Consumer Staples | 10.2 | 16.7 |
| Energy | 9.7 | 8.9 |
| Industrials | 5.6 | 6.6 |
| Communication Services | 5.5 | 7.6 |
| Utilities | 5.4 | 6.5 |
| Real Estate | 4.1 | 1.3 |
| Health Care | 3.7 | 2.2 |
| Information Technology | 1.0 | 1.1 |
| ----- | ----- | |
| 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 - ADR | Brazil | 8.6 | 7.2 |
| Banco Bradesco | Brazil | 6.8 | 6.0 |
| Vale | Brazil | 6.1 | 6.4 |
| America Movil | Mexico | 5.5 | 5.0 |
| B3 | Brazil | 4.4 | 3.6 |
| Walmart de Mexico y Centroamerica | Mexico | 4.0 | 3.1 |
| Ternium | Argentina | 3.7 | |
| Itau Unibanco | Brazil | 3.3 | 5.0 |
| Lojas Renner | Brazil | 3.2 | 1.4 |
| B2W CIA Digital | Brazil | 2.8 | 0.7 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of April 2020, the Company's NAV returned +5.7%1 with the share price moving +0.6%1. The Company's benchmark, the MSCI EM Latin America Index, returned +4.5%1 on a net basis (all performance figures are in sterling terms with dividends reinvested).
April saw the paradox of strong risk on sentiment in financial markets fly in the face of an unprecedented contraction in global economic activity as both lockdowns and negative COVID-19 related news-flow intensified and oil markets suffered a technical collapse, causing WTI (West Texas Intermediate) crude prices to turn negative for the first time in history (although the oil price did recover somewhat towards the end of the month with OPEC and supply cuts kicking in from May). Latin America rebounded in April but underperformed Global Emerging Market equities. Positive returns were seen across Latin America, recovering after the March sell off, which was driven by the COVID-19 outbreak and its impact on the economy.
Stock selection in Brazil contributed most to relative performance returns over the period. The portfolio' s underweight positioning in Chile detracted most from relative returns. An overweight position relative to the benchmark in B2W, an online retail company in Latin America, was the top contributor to relative performance as e-commerce benefited from the COVID-19 lockdown. The absence of Ambev, a Brazilian brewing company, from the portfolio contributed positively to returns on a relative basis as the stock declined as a result of beer volumes decreasing by 50% in March. On the other hand, the overweight position in Banco Bradesco detracted most from relative performance. A lack of positioning in Enel Americas, a Chilean utility company servicing Argentina, Brazil, Chile, Colombia, and Peru, detracted from relative performance as the stock has been resilient given its defensive nature and as the company maintained the dividend despite COVID-19. We do not own the stock in the portfolio given better growth opportunities elsewhere.
Over the month we added to Vale, a Brazilian mining and iron ore company, on cheap valuations and economic normalizing in China post COVID-19, with expectations of increased iron ore demand from China. We shifted country exposure out of Brazil into Chile to position the portfolio away from countries experiencing strong fiscal deterioration and rotating into countries with a relatively economic outlook. As such, we initiated a position in Banco de Chile and reduced positions in Banco Bradesco and ITAU. We cut the holding of Bancolombia on the weaker economic outlook for Colombia given lower oil prices and a reduced conviction in the bank's ability to avoid defaulting loans. We sold holding of M. Dias Branco, a wheat products producer.
The coronavirus and associated Covid-19 disease has spread throughout the world, prompting "social distancing" and often strict government control measures throughout developed and emerging markets, Latin America included. While China has been gradually easing restrictions since late February, most other emerging economies are still passing through the "peak lockdown" phase. Policy responses have been considerable, but many markets in Latin America-notably those reliant on foreign capital flows-face constraints in the scale of their response, in addition to questions about the robustness of their health systems. We expect lockdowns to ease modestly by June and more significantly in the second half of the year. Most governments plan to ease lockdown on this timeframe, though it should be noted that almost everywhere, government control measures have been kept in place longer than originally envisaged. Activity in the industrial sector and in parts of services where "social distancing" is less of a concern should rebound relatively quickly. Still, we do not expect most economies to return to their pre-crisis levels of Gross Domestic Product until 2021. The extent to which policy action now limits business bankruptcies and a breakdown in the labor market will be an important differentiator of the speed of recovery.
1Source: BlackRock, as of 30 April 2020.
19 May 2020
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.
