Portfolio Update

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at31 December 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^	10.2	7.3	13.6	34.9	47.1
Share price	8.5	6.8	17.2	39.1	48.9
MSCI EM Latin America (Net Return)^^	7.7	2.8	12.9	26.7	44.4
US Dollars:
Net asset value^	12.8	15.5	18.2	44.6	24.9
Share price	11.1	14.9	22.0	49.1	26.5
MSCI EM Latin America (Net Return)^^	10.3	10.5	17.5	35.8	22.7

^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:	547.97p
Net asset value – cum income:	552.81p
Share price:	485.50p
Total Assets#:	£231.0m
Discount (share price to cum income NAV):	12.2%
Average discount* over the month – cum income:	15.4%
Net gearing at month end**:	4.5%
Gearing range (as a % of net assets):	0-25%
Net yield##:	5.6%
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 5.4% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 34.89 cents per share) and using a share price of 643.13 US cents per share (equivalent to the sterling price of 485.50 pence per share translated in to US cents at the rate prevailing at 31 December 2019 of $1.3247 dollars to £1.00).

2019 Q1 interim dividend of 8.56 cents per share (paid on 17 May 2019).

2019 Q2 interim dividend of 9.15 cents per share (paid on 16 August 2019).

2019 Q3 interim dividend of 8.03 cents per share (paid on 8 November 2019).

2019 Q4 Final dividend of 9.15 cents per share (ex-date 09 January 2020 and payable on 06 February 2020).

*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	66.1	67.4		65.7
Mexico	22.5	23.0		20.1
Argentina	4.2	4.2		1.5
Colombia	3.2	3.3		3.2
Peru	1.3	1.3		3.0
Chile	0.8	0.8		6.5
Net current assets(inc. fixed interest)	1.9	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 6.5% of the Company’s net asset value.

Sector	% of Equity Portfolio *	% of Benchmark
Financials	25.4	32.4
Materials	14.0	13.1
Consumer Staples	12.7	14.3
Energy	12.4	10.3
Consumer Discretionary	9.9	6.1
Industrials	9.9	6.8
Communication Services	4.5	6.5
Utilities	3.9	5.9
Real Estate	3.1	1.5
Health Care	3.0	2.2
Information Technology	1.2	0.9
	-----	-----
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
Petrobras	Brazil	9.1	7.8
Itau Unibanco	Brazil	7.5	6.3
Banco Bradesco	Brazil	5.7	6.6
Vale	Brazil	4.7	5.9
America Movil	Mexico	4.5	3.8
Banco do Brasil	Brazil	4.4	1.6
FEMSA	Mexico	3.3	2.6
Walmart de Mexico y Centroamerica	Mexico	3.2	2.1
Grupo Financiero Banorte Ternium	Mexico Argentina	2.8 2.8	2.1 0.0

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

For the month of December 2019, the Company’s NAV returned 10.2%¹ with the share price moving 8.5%¹. The Company’s benchmark, the MSCI EM Latin America Index, returned 7.7%¹ on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin American equities outperformed both Emerging Market (EM) and Developed Market equities in December. Argentina outperformed in December given the overall positive global sentiment towards equities and as a period marked by two main local events: the new government of President Fernandez taking office and MSCI’s decision to keep Argentina under the EM category (although still under consultation). Brazil was the second best (after Colombia) regional performer in 2019, after a strong month of December. In addition to the positive global sentiment for equities in December, benign local economic releases helped to boost market performance. Colombia and Chile were also strong performers after a weak month in November, affected by social unrest and protests. In Colombia, the scale of the protests did not become significant in size and an oil price rally helped to boost local equity market. In Chile, a reduction in violence coupled with a strong intervention program announced by the Central Bank of Chile were the main drivers of market performance. Mexico underperformed the Latin America region in December with declining GDP (Gross Domestic Product) and PMI (Purchasing Managers Index) hitting its lowest level since the US election. In this context, Banxico dropped interest rates 25 basis points for the fourth time in 2019. Peru was the worst performer in the region. The Company’s stock selection in Brazil was the largest contributor to relative returns in December, while allocation to Mexico weighed on relative performance the most.

An overweight position in Companhia de Locacao das Americas, a Brazilian company engaged in the leasing of motor vehicles, was the top contributor on a relative basis as the stock benefits from high growth of several sub-divisions from the car rental segment, good management policy and attractive valuations. Our holding in Via Varejo, a Brazilian retailer of electronics and furniture, was also amongst the top contributors to performance during the month as the stock rose benefitting from the turnaround of the firm’s e-commerce platform under the new management and a record number of Black Friday sales. The holding of Ternium, a manufacturer of flat and long steel products in Mexico, was the top detractor on a relative basis as steel price was down over the month and the stock gave up some of its gains in previous months. Our overweight position in Cemex, a Mexican multinational building materials company, also weighed on returns as the stock underperformed in December. We continue to like the stock given strong US housing data, the potential for improving economic trends in Mexico, the company’s announcement that it plans to sell its Kentucky plant as part of efforts to deleverage their balance sheet and attractive valuations.

Over the month we added to Grupo Aeroportuario Del Pacifico, the Mexican airport operator, which should benefit from a larger than expected tariff increase and a more pragmatic and business friendly regulatory stance in Mexico. We initiated a position in Lojas Americanas, a Brazilian retail chain, after we attended their investor day in Rio De Janeiro and came away impressed with the strategy to grow in e-commerce and improvements made to the convenience store business model. We cut our holding in Neonergia, a Brazilian utility services company, by taking profits after the stock’s strong performance. We also sold our holding of Enel Chile, an electric energy company, taking advantage of its recent outperformance and locking in profits. The portfolio ended the month being overweight to Brazil and Mexico, while being underweight to Chile, Peru, Colombia and Argentina. At the sector level, we are overweight to consumer discretionary and real estate. We are underweight financials and materials.

Brazil continues to display a constructive environment in congress to advance President Jair Bolsonaro’s ambitious set of fiscal and administrative reforms.  We maintain the view that Brazil is on the path of modest economic recovery backed by structural tailwinds including an uptick in private investment, a significant increase in oil production and increased formal job creation. In Mexico, economic growth has grinded to a halt as the private sector has reigned in investment related to President Lopez Obrador’s uncertain policy initiatives. We see equity valuations in Mexico trading at multi-year lows, reflecting lower growth environment, and look towards easing monetary policy, and eventual approval of USMCA (United States-Mexico-Canada) trade agreement in North America and the launch of a national infrastructure plan as catalysts to improve business sentiment. In Peru, we are underweight as we see negative newsflow on politics as President Vizcarra’s initiatives to dissolve Congress continues to result in further political uncertainty, leading to reduced business confidence. The Company has recently reduced its underweight position in Colombia as valuations and economic stability has led to intriguing investment opportunities. Argentina’s presidential transition continues to present uncertainty and we look to take advantage of opportunities arising from volatility and extreme pessimism in the near term. Finally, we remain comfortable with an underweight position in Chile amidst a background of protests related to social inequality and signs of economic growth deceleration in the economy. While the political landscape in Latin America continues to present both opportunities and challenges in equity markets, we are encouraged as the external environment appears to support asset prices due to reduction in trade tensions between the U.S. and China and global coordination to maintain low interest rates, supporting economic expansion.

Sources:
¹BlackRock as at 31 December 2019
²Datastream as at 31 December 2019

31 January 2020

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.