Portfolio Update

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at30 June 2019 and unaudited.

Performance at month end with net income reinvested   

	One month	Three months	One  year	Three years	Five years
Sterling:
Net asset value^	7.7	10.9	31.6	50.7	35.8
Share price	12.6	16.2	40.4	60.1	38.8
MSCI EM Latin America (Net Return)^^	5.1	6.9	22.9	42.9	29.4
US Dollars:
Net asset value^	8.7	8.3	26.8	43.3	1.0
Share price	13.7	13.5	35.3	52.2	3.2
MSCI EM Latin America (Net Return)^^	6.2	4.4	18.4	36.0	-3.7

^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:	571.93p
Net asset value – cum income:	575.36p
Share price:	518.00p
Total Assets#:	£244.8m
Discount (share price to cum income NAV):	10.0%
Average discount* over the month – cum income:	12.9%
Net gearing at month end**:	10.2%
Gearing range (as a % of net assets):	0-25%
Net yield##:	5.1%
Ordinary shares in issue (excluding 2,181,662 shares held in treasury):	39,259,620
Ongoing charges***:	1.0%

#Total assets include current year revenue.
##The yield of 5.1% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 33.69 cents per share) and using a share price of 659.28 US cents per share (equivalent to the sterling price of 518.00 pence per share translated in to US cents at the rate prevailing at 30 June 2019 of $1.2728 dollars to £1.00).

2018 Q4 interim dividend of 7.85 cents per share (paid on 9 November 2018)
2019 Q1 interim dividend of 8.13 cents per share (paid on 8 February 2019)
2019 Q2 interim dividend of 8.56 cents per share (paid on 17 May 2019)
2019 Q3 interim dividend of 9.15 cents per share (declared on 1 July 2019 and payable on 16 August 2019)

*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 2018.

Geographic Exposure

	% of Total Assets^	% of Equity Portfolio *		MSCI EM Latin America Index
Brazil	65.6	64.6		62.2
Mexico	23.0	22.6		20.7
Argentina	6.8	6.7		2.9
Chile	3.0	3.0		7.5
Colombia	2.0	2.0		3.4
Panama	1.1	1.1		0.0
Peru	0.0	0.0		3.3
Net current liabilities (inc. fixed interest)	-1.5	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 8.4% of the Company’s net asset value.

Sector	% of Equity Portfolio *	% of Benchmark
Financials	32.1	34.8
Materials	14.3	14.0
Energy	13.1	10.7
Consumer Staples	12.7	14.8
Industrials	9.4	6.1
Utilities	5.6	5.6
Communication Services	5.4	6.1
Real Estate	3.6	1.4
Consumer Discretionary	2.2	4.8
Information Technology	1.6	0.7
Health Care	0.0	1.0
	-----	-----
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
Itau Unibanco	Brazil	10.2	6.8
Petrobras	Brazil	9.2	7.9
Banco Bradesco	Brazil	6.0	7.4
Vale	Brazil	5.0	6.3
Femsa	Mexico	4.4	2.8
Grupo Financiero Banorte	Mexico	3.8	2.2
Banco do Brasil	Brazil	3.7	1.8
B3	Brazil	3.3	3.0
Rumo Logística Operada Multimodal	Brazil	3.2	0.9
America Movil	Mexico	2.9	3.6

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

For the month of June 2019, the Company’s NAV returned 7.7%¹ with the share price moving 12.6%¹. The Company’s benchmark, the MSCI EM Latin America Index (net basis), increased by 5.1¹ (all performance figures are in sterling terms with dividends reinvested).

Latin America outperformed both emerging and developed markets in June, supported by outperformance in Argentina, as the market continued to rally after last month’s inclusion into MSCI indices. Lender, Banco Macro, was the largest contributor to the portfolio over the period, while energy name, YPF, also performed strongly. Brazilian selection was the primary contributor to returns this month, as the market rallied on positive social security reform momentum and a dovish central bank, indicating potential for further rate cuts. Brazilian home builders, Cyrela Brazil Realty and MRV Engenharia, were also among June’s stronger performers on the back of increased lending support for home buyers. Stock selection in Mexico and Chile also benefitted the Company, with Chilean miner, Antofagasta, being another top contributor as copper grinded higher on positive supply demand dynamics and continued strikes. Underweight positioning in Colombia weighed on relative returns as the central bank eased rates and activity picked up. A lack of positioning in Argentine bank, Galicia, was the largest detractor in June.

Aggregate positioning was relatively unchanged, with Brazil still being the Company’s largest overweight. However, we took advantage of this month’s rally to trim Brazilian exposure for risk management purposes. New positions include Chilean utility, Enel, due to stock price underperformance despite a strong performance in recent auctions, a trend which we believe will continue, as well as, Colombian energy name, Ecopetrol, and Panamanian airline, Copa. Following headlines concerning the possibility of imposed tariffs by the US, we have looked to reduce exposure in Mexico across sectors. The Company ended the month being overweight in Brazil, Mexico and Argentina, while being underweight in Chile, Peru, and Colombia. At the sector level, we are overweight to the domestic consumer and real estate sectors, while being underweight utilities and financials.

Brazil remains our largest overweight given the increasing prospects for positive structural economic reforms. Despite soft economic activity data, easy monetary conditions and advancements in social security reform remain focal points for our conviction. We maintain a cautious outlook on Mexican equities as the economy slows and trade headwinds stemming from President Trump’s announcement of a progressive tariff on Mexican imports if immigration concerns are not addressed. In Peru, we are underweight as we see negative newsflow on politics as President Vizcarra’s approval rates continue to fall. We remain underweight on Colombia as we see the latest relaxation of the fiscal rule casting a shadow on the country’s commitment to fiscal stability.  The Company has recently been reducing the underweight in Chilean equities due to increasingly attractive valuations. Finally, the dramatic sell off in Argentina in 2018 leaves stocks trading at attractive valuations while inflation and foreign currency have mostly stabilized providing a foundation for the economy to rebound from recent downturn. May’s MSCI Index reclassification to EM has also helped bring increased demand to the market through approximately $600m in passive flows.

Sources:
¹BlackRock as at 30 June 2019
 

29 July 2019

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.