BlackRock Latin Am Portfolio Update

 
TIDMBRLA 
 
BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151) 
All information is at 31 December 2017 and unaudited. 
 
Performance at month end with net income reinvested 
 
                              One     Three      One    Three      Five   ^^Since 
                            month    months     year    years     years  31.03.06 
                                %         %        %        %         %         % 
 
Sterling: 
 
Net asset value^              5.6      -2.6     18.1     28.7       5.6      94.8 
 
Share price                   5.2      -3.6     19.9     28.3       6.1      83.3 
 
MSCI EM Latin America         4.6      -3.0     13.4     30.2       3.7     108.0 
 
US Dollars: 
 
Net asset value^              5.5      -1.8     29.3     11.7     -12.0      52.2 
 
Share price                   5.1      -2.8     31.3     11.4     -11.6      43.2 
 
MSCI EM Latin America         4.5      -2.2     24.2     12.9     -13.7      62.2 
 
^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:                                         520.44p 
 
Net asset value - cum income:                                           525.05p 
 
Share price:                                                            460.00p 
 
Total Assets#:                                                          GBP224.2m 
 
Discount (share price to cum income NAV):                                 12.4% 
 
Average discount* over the month - cum income:                            12.8% 
 
Net gearing at month end**:                                                7.9% 
 
Gearing range (as a % of net assets):                                     0-25% 
 
Net yield##:                                                               2.5% 
 
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      % of Equity           MSCI EM Latin 
                                 Assets      Portfolio *          American Index 
 
Brazil                             64.1             64.4                    57.7 
 
Mexico                             24.6             24.7                    24.9 
 
Argentina                           4.3              4.3                     0.0 
 
Peru                                3.8              3.8                     3.3 
 
Chile                               1.9              1.9                    10.6 
 
Panama                              0.5              0.5                     0.0 
 
Colombia                            0.3              0.4                     3.5 
 
Net current assets (inc.            0.5              0.0                     0.0 
Fixed interest) 
 
                                  -----            -----                   ----- 
 
Total                             100.0            100.0                   100.0 
 
                                  -----            -----                   ----- 
 
 
 
Sector                        % of Equity Portfolio              % of Benchmark 
                                                  * 
 
Financials                                     30.2                        29.8 
 
Consumer Staples                               15.4                        17.0 
 
Materials                                      14.9                        16.4 
 
Consumer Discretionary                         13.8                         5.7 
 
Energy                                          8.8                         8.6 
 
Telecommunication Services                      6.9                         6.4 
 
Industrials                                     5.7                         6.3 
 
Utilities                                       2.1                         5.8 
 
Real Estate                                     1.3                         1.5 
 
Information Technology                          0.5                         1.4 
 
Health Care                                     0.4                         1.1 
 
                                              -----                       ----- 
 
Total                                         100.0                       100.0 
 
                                              -----                       ----- 
 
*excluding net current assets & fixed interest 
 
Ten Largest Equity Investments (in percentage order) 
 
                             Country of                     % of             % of 
Company                      Risk               Equity Portfolio        Benchmark 
 
Vale                         Brazil                          8.1              6.0 
 
Itau Unibanco                Brazil                          7.4              6.5 
 
Banco Bradesco               Brazil                          6.7              6.3 
 
Petrobras                    Brazil                          6.5              5.4 
 
America Movil                Mexico                          5.1              4.6 
 
AmBev                        Brazil                          5.1              4.7 
 
Femsa                        Mexico                          3.9              2.9 
 
B3                           Brazil                          3.0              2.2 
 
Credicorp                    Peru                            2.7              2.2 
 
Grupo Financiero Banorte     Mexico                          2.6              2.1 
 
Commenting on the markets, Will Landers, representing the Investment Manager 
noted: 
 
For the month of December 2017, the Company's NAV rose by 5.6%* with the share 
price rising by 5.2%*. The Company's benchmark, the MSCI EM Latin America 
Index, rose by 4.5%* (all performance figures are in sterling terms with income 
reinvested and are net of ongoing charges). 
 
Selection in Brazil was the primary driver of returns in the fourth quarter of 
2017 as confidence indicators continue to improve and inflation surprised to 
the downside, resulting in yet another 50 basis points cut to the SELIC 
(Sistema Especial de Liquidação e Custodia, the Brazilian Central Bank interest 
rate) in December. This has resulted in 675 basis points being trimmed off the 
headline rate this year with expectations for at least one more cut in the 
first quarter of 2018. Vale was the quarter's top performing stock, supported 
by iron ore strength, on the back of global supply discipline, as well as the 
conclusion of the company's share unification. Our off-benchmark allocation to 
Argentina continued to benefit the strategy amid improving investor confidence 
over the continuation of President Macri's pro-reform agenda. Lenders, 
Supervielle and Galicia, as well as internet retailer, Mercadolibre, were among 
the top contributors moving in line with the market. Our underweight to Mexico 
also contributed to relative performance as the uncertainty over domestic 
politics remains an overhang and the Peso continued to weaken into year-end. On 
the other hand, our underweight to Chile was the quarter's largest detractor as 
both the currency and market surged in December following the presidential 
election run-off, making up for November declines. From a stock specific 
perspective, our lack of positioning in Mexican Insurer, Gentera, Chilean 
energy name, Empresas Copec, and Colombia's Ecopetrol were the top detractors 
over the period. 
 
During the quarter we shifted our Brazilian positioning, replacing some of our 
financials exposure with more domestic consumption related names. Specifically, 
we topped up our position in digitally-oriented retailer Magazine Luiza, while 
also initiating positions in CIA Hering and B2W Digital. On the other hand, we 
exited our positions in BRF after the surprise departure of the firm's CEO, as 
well as toll road operator, CCR, given the firm's lack of success in executing 
its merger and acquisition pipeline due to increased competitiveness for 
distressed Brazilian infrastructure assets. We have also been selectively 
adding to our Mexican positioning. We notably added to our America Movil 
allocation, amid an improving regulatory and competitive landscape. Similarly, 
we initiated a position in airport operator GAP, benefitting from growth in 
Mexican air travel. The Company ended the period being overweight Brazil, 
Mexico, and Peru while being underweight Chile and Colombia. We also maintain 
an off-benchmark allocation to Argentina. At the sector level, we are 
overweight the domestic consumer and energy, while being underweight utilities 
and industrials. 
 
As we enter 2018, our positioning and outlook remain relatively unchanged from 
the last quarter of 2017. Despite going through yet another round of political 
headwinds the primary drivers for Brazilian equities should remain the same: a) 
persistently low inflation has allowed the Central Bank to continue it easing 
cycle, which has set the foundation for the needed economic recovery (the 
Central Bank cut rates another 50 basis points in December, bringing the SELIC 
down to 7%; the market has seen 725 basis points of easing so far during the 
current cycle, resulting in the SELIC hitting its lowest point in history); and 
b) continued progress on the reform agenda, especially pension reform (with a 
focus on minimum retirement age implementation), which should help to bring 

stability to government accounts in the medium term. We expect the reform 
process to be the focus during the first quarter of the year, shifting to 
elections as the process starts officially in April. Meanwhile, the recent 
round of NAFTA (North American Free Trade Agreement) negotiations illustrated 
that the process will be long, reiterating our cautious view on Mexican growth, 
and therefore our underweight - uncertainties regarding the 1 July 2018 
presidential election add to our conviction on such positioning. Should the 
apparent selection of Jose Antonio Meade as the PRI's (Institutional 
Revolutionary Party) candidate become a competitive bid, this would force us to 
revisit our positioning as it could bring near term positive momentum to 
Mexican equities. We continue to underweight Chile due to rich valuations and 
lack of free-float liquidity (President Piniera's election seems mostly priced 
in), and despite slower than expected progress on the infrastructure front, we 
continue to favour Peru among its Andean neighbours. Argentina remains another 
top country for the strategy as fundamentals persist, with October mid-term 
elections providing support for a continuation of President Macri's reform 
agenda. 
 
*Source: BlackRock as of 31 December 2017 
 
16 January 2018 
 
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. 
 
 
 
END 
 

(END) Dow Jones Newswires

January 16, 2018 09:52 ET (14:52 GMT)