Company Announcements

BlackRock Latin American Investment Trust Plc - Portfolio Update

The information contained in this release was correct as at 30 September 2020.  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 AMERICA INVESTMENT TRUST PLC (LEI - UK9OG5Q0CYUDFGRX4151 )

All information is at 30 September 2020 and unaudited.
 

Performance at month end with net income reinvested
 


                        One  Three   One Three  Five
                      month months  year years years
                          %      %     %     %     %

Sterling:

Net asset value^       -5.3   -5.4 -32.1 -29.6  26.4

Share price            -1.0   -7.8 -29.4 -26.0  37.2

MSCI EM Latin America  -1.7   -5.7 -32.7 -28.9  29.7
(Net Return)^^

US Dollars:

Net asset value^       -8.1   -1.0 -28.7 -32.2   7.8

Share price            -4.0   -3.5 -25.8 -28.7  17.0

MSCI EM Latin America  -5.1   -1.3 -29.4 -31.5  10.7
(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. Historically the benchmark data for the Company has always been stated on a Gross basis. However, as disclosed in the Company’s Interim Report for the six months ended 30 June 2018, it is the Board’s intention to monitor the Company’s performance with reference to the NR version of the benchmark. For transparency both sets of benchmark data have been provided.

Sources: BlackRock, Standard & Poor’s Micropal

At month end


Net asset value - capital only:                                330.01p

Net asset value - including income:                            337.55p

Share price:                                                   308.50p

Total assets#:                                                 £143.6m

Discount (share price to cum income NAV):                         8.6%

Average discount* over the month – cum income:                   12.6%

Net gearing at month end**:                                       9.9%

Gearing range (as a % of net assets):                            0-25%

Net yield##:                                                      6.2%

Ordinary shares in issue(excluding 2,181,662 shares held in 39,259,620
treasury):

Ongoing charges***:                                               1.1%



#Total assets include current year revenue.

##The yield of 6.2% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 24.76 cents per share) and using a share price of 398.83 US cents per share (equivalent to the sterling price of 308.50 pence per share translated in to US cents at the rate prevailing at 30 September 2020 of $1.2928 dollars to £1.00).

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 (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 (pay date 09 November 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 MSCI EM Latin America
                                      Portfolio *                 Index

Brazil                           61.7        62.1                  63.1

Mexico                           26.6        26.7                  22.6

Chile                             7.6         7.7                   7.0

Argentina                         3.5         3.5                   1.7

Peru                              0.0         0.0                   3.2

Colombia                          0.0         0.0                   2.4

Net current assets                0.6         0.0                   0.0
(inc. 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 10.5% of the Company’s net asset value.


Sector                 % of Equity Portfolio* % of Benchmark*

Materials                                22.8            18.1

Financials                               20.3            25.0

Consumer Discretionary                   17.9             7.8

Consumer Staples                          8.3            15.5

Energy                                    7.4             8.7

Industrials                               7.0             7.1

Communication Services                    5.7             6.9

Utilities                                 5.4             6.2

Real Estate                               3.7             0.9

Health Care                               1.5             2.2

Information Technology                    0.0             1.6

                                        -----           -----

Total                                   100.0           100.0

                                        =====           =====



*excluding net current assets & fixed interest


                                  Country of Risk             % of      % of
Company                                           Equity Portfolio Benchmark

Vale - ADS                        Brazil                       8.2       8.4

Petrobras - ADR                   Brazil                       7.4       6.4

Banco Bradesco - ADR              Brazil                       6.1       4.2

America Movil - ADR               Mexico                       5.7       4.6

B3                                Brazil                       4.6       4.4

Walmart de Mexico y Centroamerica Mexico                       4.0       2.7

Afya                              Brazil                       3.7       0.0

Ternium                           Argentina                    3.5       0.0

Grupo Mexico                      Mexico                       3.4       1.7

Grupo Financiero Banorte          Mexico                       3.3       2.0



Commenting on the markets, Ed Kuczma and Sam Vecht, representing the Investment Manager noted;

For the month of September 2020, the Company’s NAV returned -5.3%1 with the share price moving -1.0%1. The Company’s benchmark, the MSCI EM Latin America Index, returned -1.7%1 on a net basis (all performance figures are in sterling terms with dividends reinvested).

The Latin American region posted a negative performance over the month. All Latin American countries, with the exception of Mexico, posted weak performance, with Colombia and Brazil leading the declines.

Our overweight position in Mexico contributed most to relative performance during the month, while stock selection in Brazil detracted most over the same period. An off-benchmark holding in Afya, a leading medical education group in Brazil, was the top contributor on a relative basis as the company has been dealing well with the COVID-19 crisis and took advantage by accelerating acquisitions. An off-benchmark position in Ternium, the leading steel company in Latin America, also added to relative performance as the stock benefitted from rising steel prices in North America. On the other hand, an overweight position in B2W Companhia Digital, an online retail company, detracted most from relative performance as the stock gave up some of its previously strong gains. An overweight position in Brazilian bank, Banco Bradesco, also weighed on returns due to concerns of rising fiscal spending by the Brazilian government in an effort to stimulate the economy in the wake of the pandemic. Despite this, we added to Banco Bradesco during the month, on the back of attractive valuations and an expectation of upward revisions in their 2021 earnings as economy recovering faster than expected.

We initiated a position in Walmart de Mexico, the Mexican retailer, as we see stable growth and expect a higher return on capital. We reduced exposure to Vale, the Brazilian metals and mining company, as most of the positives, such as the peak in iron ore prices and resumption of their dividend, were priced in the stock. We sold our holding in Mexican miner, Southern Copper taking profits in the recent outperformer. The portfolio ended the month being overweight to Mexico, Brazil, Argentina and Chile, while being underweight to Peru and Colombia. At the sector level, we are overweight to consumer discretionary and materials and underweight to consumer staples and financials.

The coronavirus and associated COVID-19 disease have spread throughout the world, prompting "social distancing" and often strict government control measures throughout the 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 saw lockdowns easing modestly by June and expect more significant easing measures in the second half of the year. Most governments plan to do so 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 level of GDP (Gross Domestic Product) until 2021. The extent to which policy action now limits business bankruptcies and a breakdown in the labour market will be an important differentiator of the speed of recovery.

1Source: BlackRock, as of 30 September 2020.

21 October 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.