BlackRock Latin American Investment Trust Plc - Portfolio Update

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 month %	Three months %	One  year %	Three years %	Five years %	^^Since 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#:	£224.2m
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 Assets	% of Equity Portfolio *		MSCI EM Latin 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. Fixed interest)	0.5	0.0		0.0
	-----	-----		-----
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)

Company	Country of Risk	% of Equity Portfolio	% of 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.

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