Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 30 November 2017 and unaudited.

Performance at month end with net income reinvested.
 

	One  month	Three months	One  year	Three  years	Five  years	Since  Launch*
Sterling:
Share price	5.3	5.6	29.5	52.9	141.6	103.6
Net asset value	0.0	-1.3	19.7	42.8	108.1	88.5
MSCI Frontiers Index (NR)	-0.8	-0.5	21.2	24.7	82.5	56.5
MSCI Emerging Markets Index (NR)	-1.7	-1.7	22.6	38.4	48.3	37.5
US Dollars:
Share price	7.3	11.0	40.2	32.3	104.4	77.3
Net asset value	1.9	3.7	29.6	23.5	75.9	63.9
MSCI Frontiers Index (NR)	1.2	4.5	31.3	7.8	54.2	35.9
MSCI Emerging Markets Index (NR)	0.2	3.3	32.8	19.6	25.3	19.4

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end Ordinary Shares
US Dollar
Net asset value - capital only:	197.20c
Net asset value - cum income:	202.60c
Sterling:
Net asset value - capital only:	145.67p
Net asset value - cum income:	149.66p
Share price:	164.50p
Total assets (including income):	£270.5m
Premium to cum-income NAV:	9.9%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	3.2%
Ordinary shares in issue:	180,766,108
Ongoing charges**:	1.4%
Ongoing charges plus taxation and performance fee:	1.6%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.2% and includes the 2017 final dividend of 4.20 cents per share declared on 4 December 2017 and payable to shareholders on 9 February 2018 and the 2017 interim dividend of 2.70 cents per share announced on 25 May 2017 and paid to shareholders on 30 June 2017.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2017.
 

Sector Analysis	Gross assets(%)*		Country Analysis	Gross assets(%)*
Financials	40.5		Argentina	22.1
Consumer Staples	11.1		Kuwait	13.3
Energy	11.0		Vietnam	9.2
Health Care	8.6		Romania	8.1
Telecommunication Services	8.4		Kazakhstan	8.0
Materials	8.0		Egypt	6.7
Real Estate	7.1		Nigeria	6.1
Industrials	6.7		Morocco	6.0
Utilities	4.0		Sri Lanka	4.6
Consumer Discretionary	3.4		Bangladesh	4.1
Information Technology	2.2		Ukraine	4.1
	-----		Kenya	3.7
Total	111.0		Columbia	3.5
	-----		Philippines	2.7
Short positions	-3.8		Estonia	2.1
	=====		Slovenia	2.0
			PAN-Asian	1.6
			PAN-Middle East	1.5
			Tanzania	1.2
			Eurasia	0.4
				-----
			Total	111.0
				-----
			Short positions	-3.8
				=====

*reflects gross market exposure from contracts for difference (CFDs).

Market Exposure
 

	31.12  2016     %	31.01  2017     %	28.02  2017     %	31.03  2017     %	30.04  2017     %	31.05  2017     %	30.06  2017     %	31.07  2017     %	31.082017     %	30.09  2017     %	31.10  2017     %	30.11  2017     %
Long	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	113.4	111.0
Short	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	2.5	3.8
Gross	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	115.9	114.8
Net	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	110.9	107.2

Ten Largest Equity Investments

Company	Country of Risk	% of gross assets
The National Bank of Kuwait	Kuwait	3.8
Grupo Financiero Galicia	Argentina	3.7
Halyk Savings Bank	Kazakhstan	3.1
Equity Group	Kenya	3.1
Pampa Energia	Argentina	2.8
MHP	Ukraine	2.8
Zenith Bank	Nigeria	2.7
Irsa Inversiones	Argentina	2.7
Mobile Telecommunications	Kuwait	2.6
Burgan Bank	Kuwait	2.4

Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:

In November, the Company’s NAV rose by 1.9%* on a US Dollar basis with net income reinvested. For reference, the MSCI Frontier benchmark rose by 1.2%*, while the MSCI Emerging Markets Index rose by 0.2%* on a US Dollar basis, over the same period.

Most notable during the month was the substantial rise in the Vietnamese market, up 17.5%.  The market was driven by net foreign inflows of $458m, with average daily volume $310m, nearly double the previous month volume of $169m.  Year to date net foreign inflows have been $1.1bn.  The State Capital Investment Corporation’s (SCIC) divestment of a further 3.3% of their stake in Vinamilk to Jardine Cycle and Carriage, at a 24% premium to current market prices helped to bolster prices in the largest index name.  The trust benefited from participating in the listing of Vincom Retail, the largest mall operator in Vietnam which closed the month up 21% from the transaction price.  Listed brokerage firm, Saigon Securities, rose 19% as investors expected them to benefit from increasing trading volumes and rising valuations.  However, our underweight position to Vietnam detracted from relative performance during the month. 

Despite the opposition boycott of the election re-run, the Kenyan market rallied 8% as Uhuru Kenyatta was sworn in for a second term as President. The Trust benefited from its holding in equity bank, which rose 13% during the month.  Whilst political tensions remain, we expect investor focus to return to operational metrics in 2018. 

Off-benchmark positions in Egyptian healthcare names Cleopatra Hospital (+9%*) and IDHC (+20%*) performed well, the latter of which reported results showing a stronger than expected uptick in patients from both contracts and walk-ins. The Egyptian current account deficit narrowed to a three year low in the third quarter of 2017 as the positive trajectory following the devaluation in November 2016 continued to be felt. The trade deficit narrowed 5% year-on-year, particularly benefiting from an increase in domestic gas production, the services balance was boosted by a 250% growth in tourism revenues and remittances jumped 37% year-on-year to $6bn. We continue to have a positive outlook for the Egyptian currency, especially as the Central Bank moves to reduce usage of the repatriation mechanism. 

Filipino conglomerate, LT Group, gained +11% supported by an improving pricing environment for the company’s tobacco business following the Japan Tobacco acquisition of local competitor Mighty. Kuwaiti positions detracted from performance. The market fell 13% peak to trough from mid-November before recovering somewhat to end the month down 5% on increased political tensions across the Middle East. Whilst the market suffered given its lower liquidity, we remain confident in our positions.

We took leverage down over the month, through introducing a number of short positions. On the other hand, we participated in two Initial Public Offering (IPOs): Argentine cement company, Loma Negra, in line with our positive Argentine macro view as well as Asian clothing manufacturer, Crystal International, where we think valuations are attractive.

Frontier Markets continue to exhibit strong GDP (Gross Domestic Product) growth and low government debt levels, and represent an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world

*Source: BlackRock, as at end November 2017

20 December 2017

ENDS

Latest information is available by typing www.blackrock.co.uk/brfi 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 BlackRock’s website (or any other website) is incorporated into, or forms part of, this announcement