BlackRock Latin American Investment Trust Plc - Portfolio Update
PR Newswire
London, February 17
The information contained in this release was correct as at 31 January 2021. 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 2021 and unaudited.
Performance at month end with net income reinvested
| One month % | Three months % | One year % | Three years % | Five years % | |
| Sterling: | |||||
| Net asset value^ | -7.0 | 24.4 | -19.1 | -18.4 | 55.5 |
| Share price | -7.1 | 24.3 | -19.9 | -12.4 | 78.3 |
| MSCI EM Latin America (Net Return)^^ | -7.1 | 19.8 | -18.2 | -19.2 | 54.9 |
| US Dollars: | |||||
| Net asset value^ | -6.6 | 32.1 | -15.7 | -21.2 | 50.4 |
| Share price | -6.6 | 32.0 | -16.5 | -15.5 | 72.5 |
| MSCI EM Latin America (Net Return)^^ | -6.7 | 27.2 | -14.8 | -22.0 | 50.0 |
^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: | 400.83p |
| Net asset value - including income: | 400.83p |
| Share price: | 371.00p |
| Total assets#: | £170.2m |
| Discount (share price to cum income NAV): | 7.4% |
| Average discount* over the month - cum income: | 9.2% |
| Net gearing at month end**: | 11.3% |
| Gearing range (as a % of net assets): | 0-25% |
| Net yield##: | 4.5% |
| 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 4.5% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 23.06 cents per share) and using a share price of 509.48 US cents per share (equivalent to the sterling price of 371.00 pence per share translated in to US cents at the rate prevailing at 31 January 2021 of $1.3732 dollars to £1.00).
2020 Q1 interim dividend of 4.59 cents per share (paid on 20 May 2020).
2020 Q2 interim dividend of 5.57 cents per share (paid on 11 August 2020).
2020 Q3 interim dividend of 5.45 cents per share (paid 09 November 2020).
2020 Q4 Final dividend of 7.45 cents per share (payable on 08 February 2021).
*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 2020.
| Geographic Exposure | % of Total Assets | % of Equity Portfolio * | MSCI EM Latin America Index |
| Brazil | 64.7 | 62.9 | 63.8 |
| Mexico | 25.5 | 24.8 | 22.5 |
| Chile | 9.3 | 9.0 | 6.7 |
| Argentina | 3.4 | 3.3 | 1.6 |
| Peru | 0.0 | 0.0 | 3.0 |
| Colombia | 0.0 | 0.0 | 2.4 |
| Net current liabilities (inc. fixed interest) | -2.9 | 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* |
| Materials | 26.4 | 21.8 |
| Financials | 25.3 | 24.6 |
| Industrials | 9.6 | 6.8 |
| Energy | 8.6 | 9.4 |
| Consumer Discretionary | 8.0 | 6.5 |
| Communication Services | 6.0 | 6.1 |
| Health Care | 4.4 | 2.5 |
| Real Estate | 4.0 | 0.9 |
| Information Technology | 3.9 | 1.7 |
| Consumer Staples | 3.8 | 14.4 |
| Utilities | 0.0 | 5.3 |
| ----- | ----- | |
| Total | 100.0 | 100.0 |
| ===== | ===== |
*excluding net current liabilities & fixed interest
Company | Country of Risk | % of Equity Portfolio | % of Benchmark |
| Petrobras: | |||
| Brazil | 5.7 | 3.2 |
| Brazil | 2.9 | 4.0 |
| Vale - ADS | Brazil | 8.2 | 10.3 |
| Banco Bradesco - ADR | Brazil | 7.6 | 4.4 |
| B3 | Brazil | 4.7 | 3.9 |
| America Movil - ADR | Mexico | 4.0 | 4.0 |
| Walmart de Mexico y Centroamerica | Mexico | 3.8 | 2.6 |
| Group Mexico | Mexico | 3.5 | 2.3 |
| Suzano | Brazil | 3.5 | 1.5 |
| Notre Dame Intermedica Participacoes | Brazil | 3.3 | 1.5 |
| Quimica Y Minera - ADR | Chile | 3.1 | 1.0 |
Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;
For the month of January 2021, the Company's NAV returned -7.0%1 with the share price moving -7.1%1. The Company's benchmark, the MSCI EM Latin America Index, returned -7.1%1 on a net basis (all performance figures are in sterling terms with dividends reinvested).
Latin American (LatAm) equities posted negative performance over the month. All Latin American countries posted a weak performance in January, with Colombia and Argentina leading the declines.
Stock selection in Mexico contributed the most to relative performance over the period while stock selection in Brazil detracted most from relative returns. An overweight position in Brazilian medical group, Notre Dame Intermedica, contributed the most to relative performance during the month as the stock rose on potential synergies and reduced competition concerns from the merger with Hapvida, an insurer and hospital operator. An overweight position in Cemex, the Mexican cement company, also benefited the portfolio as the stock rose on increased volumes and prices in Mexico. The Company's underweight holding in Brazilian bank, Itau Unibanco, also added to relative performance as the stock declined in line with the rest of Brazilian market. For similar reasons, an overweight position in Brazilian bank, Banco Bradesco, was the top detractor on a relative basis. An overweight positon in Eletrobras, a major Brazilian electric utilities company, also weighed on returns during the month as the stock declined following the resignation of the company's CEO. A lack of position in Brazilian industrial engineering company, Weg, also weighed on relative returns as the stock rallied due to expectations of continued government stimulus and depreciation in the Brazilian Real.
Over the month we added to Globant, an IT software and development company, as the company continues to show resilient growth and profitability based on structural demand related to digital transformations and adoption of artificial intelligence amongst client facing consumer companies. We initiated a position in Cielo, a Brazilian payment system company, on the back of better than expected fourth quarter results, lower competition and cheap valuations. We reduced exposure to Mexican cement company, Cemex, to take profits following recent outperformance. We sold our holding in Brazilian bank, Banco do Brasil, as the company faced pressure from the government related to their recently announced cost cutting plan. The portfolio ended the month being overweight to Brazil and Mexico, whilst being underweight to Peru and Colombia. At the sector level, we are overweight to materials and industrials and underweight consumer staples and utilities.
As we have seen, COVID-19 has devastated the global economy in 2020, with LatAm hit especially hard. As we look ahead to 2021 we see politics and vaccine hopes as catalysts for a reflation trade. Despite LatAm equities strong fourth quarter performance, the region remains cheaper than developed markets and emerging markets on both a forward P/E (price to earnings) basis and trailing P/BV (price to book value) basis. We are optimistic on returns for LatAm equities going forward, given the prospect for low global interest rates to persist over the medium-term, an economic recovery in 2021 and anticipation of a weaker US dollar environment favouring LatAm currencies. Furthermore, LatAm equities have benefited from a recent global value rotation in the market, which we expect to continue into the new year. Higher raw material prices should also provide a tailwind for Latin America given the high level of commodity exports across major economies in the region. Focusing on Brazil, more cyclical and credit-dependent sectors appear to be recovering faster. This sectoral dynamic suggests that the Brazillian Central Bank's liquidation and risk reduction measures have, thus far, not only prevented an explosion in defaults but have also allowed banks to cushion the negative impacts of the crisis, with credit playing an important anti-cyclical role. In the long-run, to consolidate this recovery, we believe that stringent fiscal discipline is needed to limit the fiscal legacy of emergency measures.
1Source: BlackRock, as of 31 January 2021.
17 February 2021
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.
