BlackRock Latin American Investment Trust Plc - Portfolio Update

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 30 June 2017 and unaudited.

Performance at month end with net income reinvested   

	One month %	Three months %	One  year %	Three years %	Five years %	^^Since 31.03.06 %
Sterling:
Net asset value^	0.5	-5.7	16.7	5.2	3.1	75.1
Share price	-1.8	-6.0	16.8	1.3	-0.6	61.0
MSCI EM Latin America	0.1	-5.3	18.8	8.2	1.2	92.5
US Dollars:
Net asset value^	1.1	-2.0	13.4	-20.1	-14.5	31.3
Share price	-1.2	-2.4	13.4	-23.1	-17.6	20.7
MSCI EM Latin America	0.7	-1.6	15.4	-17.8	-16.2	44.2

^cum income
^^Date which BlackRock took over the investment management of the Company.
Sources: BlackRock, Standard & Poor’s Micropal

At month end
Net asset value – capital only:	470.18p
Net asset value – cum income:	475.71p
Share price:	407.75p
Total Assets#:	£197.0m
Discount (share price to cum income NAV):	14.3%
Average discount* over the month – cum income:	13.1%
Net gearing at month end**:	4.8%
Gearing range (as a % of net assets):	0-25%
Net yield##:	2.9%
Ordinary shares in issue***:	39,369,620
Ongoing charges****:	1.2%

#Total assets include current year revenue.
## calculated using total dividends declared in the last 12 months as at the date of this announcement as a percentage of month end share price.
*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.
***Excluding 2,071,662 shares held in treasury.
**** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 31 December 2016.

Geographic Exposure

	% of Total Assets	% of Equity Portfolio *		MSCI EM Latin American Index
Brazil	62.3	62.6		54.0
Mexico	27.9	28.0		30.0
Peru	3.8	3.8		3.0
Argentina	3.1	3.1		0.0
Chile	1.6	1.6		9.3
Panama	0.5	0.5		0.0
Colombia	0.4	0.4		3.7
Net current assets (inc.Fixed interest)	0.4	0.0		0.0
	-----	-----		-----
Total	100.0	100.0		100.0
	-----	-----		-----

   

Sector	% of Equity Portfolio *	% of Benchmark
Financials	30.0	30.0
Consumer Staples	20.4	17.6
Materials	15.1	15.0
Energy	9.6	7.6
Consumer Discretionary	8.3	6.0
Industrials	6.6	6.7
Telecommunication Services	5.4	6.5
Utilities	2.1	6.3
Real Estate	1.5	1.7
Information Technology	1.0	1.6
Health Care	0.0	1.0
	-----	-----
Total	100.0	100.0
	-----	-----

*excluding net current liabilities & fixed interest

Ten Largest Equity Investments (in percentage order)

Company	Country of Risk	% of Equity Portfolio	% of Benchmark
Itau Unibanco	Brazil	7.8	6.2
Petrobras	Brazil	6.9	4.6
Vale	Brazil	6.0	4.7
Banco Bradesco	Brazil	5.6	5.9
Femsa	Mexico	4.4	3.3
BM&F Bovespa	Brazil	4.0	2.1
AmBev	Brazil	3.9	4.5
Grupo Financiero Banorte	Mexico	3.6	2.8
America Movil	Mexico	3.4	4.7
Cemex	Colombia	2.9	2.4

Commenting on the markets, Will Landers, representing the Investment Manager noted;

For the month of June 2017, the Company’s NAV rose by 0.5% with the share price falling by 1.8%. The Company’s benchmark, the MSCI EM Latin America Index, rose by 0.1% (all performance figures are in sterling terms with income reinvested and are net of ongoing charges).

Brazilian stock selection was the month’s top contributor to performance as our holdings outperformed the Brazilian market which was buffeted by the political scandals surrounding President Temer. Brazil’s leading financial exchange, BM&F Bovespa, as well as iron producer, Vale, were among the top contributors; Vale gained on optimism surrounding new leadership and the recent approval of a share conversion plan that should boost investor transparency and give equal votes to all shares. Mexican selection also benefitted the Company as the broader market advanced, supported by positive political news with the market friendly PRI (Institutional Revolutionary Party) winning a narrow victory in the state of Mexico and inflation showing signs of peaking. However, our relative underweight neutralized much of the stock specific gains. Our off-benchmark allocation to Argentina was the month’s primary detractor as MSCI unexpectedly announced the postponement of their decision to reclassify the country to ‘emerging market’, citing the need to monitor the persistence of recently implemented market accessibility improvements. Whilst this result may be a disappointment to some market participants, we would remind investors of the substantial positive macro-economic changes that Argentina has witnessed over recent years. We believe that it is still a compelling investment destination for long-term investors and have been looking to selectively add exposure on weakness.  Energy names Petrobras and YPF were the top individual detractors, also being negatively impacted by oil weakness.

During the quarter, we were actively trading around news and sentiment in Brazil. We notably trimmed our Brazilian overweight following headlines implicating President Temer in corruption wrongdoing in May, specifically reducing exposure to Petrobras and Bradesco. We’ve since added back exposure, initiating positions in domestic retailer Lojas Renner, and low-income home builder MRV, in part on the expectation that we will see continuity in the economic team and reform process, regardless of President Temer’s political status. We also added exposure across our Mexican positions, though we remain cautious of the market as the domestic political landscape remains relatively challenged, and could impact broader investor sentiment as we head deeper into the 2018 election season.

As we enter the third quarter, our positioning and outlook remain relatively unchanged. We continue to be overweight Brazil, Peru and off-benchmark Argentina, while being underweight Chile, Colombia and Mexico.  In the near term, negative sentiment concerning another potential presidential scandal has reversed the green shoots seen over the last couple of months in Brazil and has put President Temer’s term and reform agenda into question. Despite weaker market confidence on the General Prosecutor’s decision to charge President Temer with passive corruption, we expect a scenario whereby continuity of the economic plan started by President Temer persists. As such the primary drivers for Brazilian equities should remain the same: a) the continued easing cycle (albeit at a slower pace) by the Central Bank which should help to bring forward the needed economic recovery; and b) progress on the reform agenda, especially labor reform, with pension reform potentially being passed in the second half of the year, bringing stability to government accounts in the medium term.  Once the latter passes, we believe that this will open the door for the Central Bank to bring the easing cycle further forward and potentially bring rates lower than market expectations.  Meanwhile, despite a more conciliatory tone from the US government on the trade front, we maintain our cautious view on Mexican growth, and therefore our underweight (despite a PRI win in the gubernatorial election in the state of Mexico in early June, results were not conclusive as to the likelihood of a MORENA (National Regeneration Movement) victory in next year’s presidential elections). We continue to be underweight in Chile due to rich valuations and lack of free-float liquidity, and despite slower than expected progress on the infrastructure front, we continue to favour Peru among its Andean neighbours. Argentina remains another top focus for the strategy as fundamentals persist, with the recent correction providing a positive entry point for longer-term investments.

24 July 2017

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.

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