The
information contained in this release was correct as at
31 March 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 March
2024 and
unaudited.
Performance
at month end with net income reinvested
|
One
month
%
|
Three
months
%
|
One
year
%
|
Three
years
%
|
Five
years
%
|
Sterling:
|
|
|
|
|
|
Net
asset value^
|
1.4
|
-6.2
|
22.6
|
38.1
|
16.9
|
Share
price
|
1.5
|
-9.0
|
20.2
|
32.5
|
20.0
|
MSCI
EM Latin America
(Net
Return)^^
|
1.2
|
-3.1
|
20.0
|
47.2
|
23.6
|
US
Dollars:
|
|
|
|
|
|
Net
asset value^
|
1.2
|
-7.0
|
25.3
|
26.4
|
13.4
|
Share
price
|
1.4
|
-9.8
|
22.7
|
21.4
|
16.4
|
MSCI
EM Latin America
(Net
Return)^^
|
1.0
|
-4.0
|
22.6
|
34.8
|
19.8
|
^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:
|
465.65p
|
Net
asset value - including income:
|
468.08p
|
Share
price:
|
401.00p
|
Total
assets#:
|
£144.1m
|
Discount (share
price to cum income NAV):
|
14.3%
|
Average discount*
over the month – cum income:
|
13.4%
|
Net
Gearing at month end**:
|
4.5%
|
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***:
|
1.13%
|
#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 30.00 cents per
share) and using a share price of 506.56 US cents per share
(equivalent to the sterling price of 401.00
pence per share translated in to US cents at the rate
prevailing at 31 March 2024 of
$1.263 dollars to £1.00).
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)
2023
Q4 Interim dividend of 8.05 cents per
share (Paid on 09 February
2024)
2024
Q1 Interim dividend of 7.39 cents per
share (To be paid on 16 May
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
|
58.2
|
58.2
|
59.1
|
Mexico
|
27.8
|
27.8
|
30.5
|
Chile
|
5.7
|
5.7
|
5.4
|
Colombia
|
2.7
|
2.7
|
1.3
|
Multi-Country
|
2.1
|
2.1
|
0.0
|
Argentina
|
1.8
|
1.8
|
0.0
|
Panama
|
1.7
|
1.7
|
0.0
|
Peru
|
0.0
|
0.0
|
3.7
|
Net
current Liabilities (inc. fixed interest)
|
-0.0
|
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 4.5% of the Company’s net
asset value.
Sector
|
% of Equity Portfolio*
|
% of Benchmark*
|
Financials
|
22.1
|
26.5
|
Consumer
Staples
|
18.8
|
16.3
|
Materials
|
17.2
|
17.8
|
Consumer
Discretionary
|
12.5
|
2.0
|
Industrials
|
12.0
|
10.3
|
Energy
|
7.5
|
13.0
|
Health
Care
|
3.8
|
1.4
|
Real
Estate
|
2.3
|
1.3
|
Communication
Services
|
2.0
|
4.1
|
Information
Technology
|
1.8
|
0.4
|
Utilites
|
0.0
|
6.9
|
|
-----
|
-----
|
Total
|
100.0
|
100.0
|
|
=====
|
=====
|
|
|
|
*excluding
net
current assets & fixed interest
Company
|
Country of Risk
|
% of
Equity Portfolio
|
% of
Benchmark
|
Vale
– ADS
|
Brazil
|
8.1
|
6.5
|
Petrobrás:
|
Brazil
|
|
|
Equity
|
|
2.0
|
|
Equity
ADR
|
|
3.2
|
4.5
|
Preference Shares
ADR
|
|
2.3
|
5.6
|
Walmart de México
y Centroamérica
|
Mexico
|
6.9
|
3.3
|
Banco
Bradesco:
|
Brazil
|
|
|
Equity
ADR
|
|
3.9
|
0.6
|
Preference
Shares
|
|
1.9
|
2.4
|
AmBev:
|
|
|
|
Equity
|
Brazil
|
0.7
|
|
Equity
ADR
|
Brazil
|
3.5
|
1.8
|
Grupo
Aeroportuario del Pacifico – ADS
|
Mexico
|
3.9
|
0.9
|
B3
|
Brazil
|
3.8
|
2.1
|
Lojas
Renner
|
Brazil
|
3.5
|
0.5
|
Itaú
Unibanco – ADR
|
Brazil
|
3.5
|
5.3
|
Grupo
Financiero Banorte
|
Mexico
|
3.5
|
4.3
|
|
|
|
|
|
|
|
|
|
Commenting
on the markets, Sam Vecht and
Christoph Brinkmann, representing
the Investment Manager noted;
The
Company’s NAV rose +1.4% in March, outperforming the benchmark,
MSCI EM Latin America Index, which returned 1.2% on a net basis
over the same period. All performance figures are in sterling terms
with dividends reinvested.
Emerging markets
more broadly continued their strong run from February, gaining
+2.5% in March. Latin America
finished the month up +1.1%. Brazil (-1.8%) was the major driver of muted
returns on softer economic data. However, all the other Latin
American countries posted positive returns. Argentina was the strongest performer(+12.7%),
followed by Colombia (+10.6%),
Peru (+10.4%), Mexico (+5.4%) and Chile (+2.1%).
At
the portfolio level, our off-benchmark holding in an Ecuadorian
gold miner was the key contributor to performance, alongside our
Chilean Materials exposure. On the other hand, having no exposure
to Peru hurt relative returns.
Stock selection in the Brazilian Materials sector also hurt
returns.
From
a security lens, Mexican silver miner, Mag Silver, was the largest
contributor over the month followed by Ecuadorian gold miner,
Lundin Gold. Both stocks have been
propelled higher by rising gold and silver prices.
Overweight in
Mexican airport operator Grupo Aeroportuario del Pacífico (GAPB)
also helped returns on the back of better-than-expected passenger
traffic numbers along with a strong Mexican Peso. Lojas Renner, a
Brazilian apparel chain, also contributed to performance as the
market is starting to anticipate a turnaround in sales and consumer
credit (due to declining interest rates).
On
the flipside, not owning Peruvian miner Southern Copper weighed on
performance. The Peruvian market has done well and the stock has
also been supported by strong copper prices. We currently have no
holdings in the country and maintain our cautious stance due to the
political and economic uncertainty. No exposure to Mexican cement
producer, Cemex, also weighed on returns. While Alpargatas, a
Brazilian footwear manufacturer, was among the top contributors in
February, the stock pulled back in March, detracting from portfolio
performance.
We
made some changes to the portfolio in March. In Argentina, we exited steel pipe manufacturer,
Tenaris as our investment case has played out. We also further
diversified our bets by adding to IT services company Globant. We
added to our holding in Brazilian retailer Lojas Renner as our
conviction in our thesis is increasing. We are starting to see
tentative signs that the credit book is finally turning
around.
We
reduced our overweight position in Cuervo, a Mexican producer and
supplier of alcoholic beverages most famously known for their
high-end tequila brand Jose Cuervo,
to take profits. We also switched some of our position in FEMSA
into Walmex, as we are concerned the former will deliver weak 1Q24
results on the back of labor cost pressure in Mexico.
Multi-Country
appears as our largest overweight, due to our holding in
Lundin Gold, a Canadian based mining
company with operations in Ecuador. Argentina is our second largest portfolio
overweight, driven by one off-benchmark holding (with no exposure
to domestic Argentina). 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 250% 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 Company’s positioning in
rate-sensitive domestic stocks. In addition to that, after three
months of very strong labor market data and higher-than-expected
inflation data in the United
States, we believe there is a high probability that both
measures will soften going forward. This view is predicated on
leading indicators such as hiring intentions and high-frequency
pricing data. If this view would prove to be correct, there should
be less pressure from rising rates in the
United States.
1Source:
BlackRock, as of 31 March
2024.
25 April 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.