Portfolio Update

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 31 July 2020 and unaudited.

Performance at month end with net income reinvested 

	One month %	Three months %	One  year %	Three years %	Five years %
Sterling:
Net asset value^	4.1	21.5	-33.2	-17.6	20.6
Share price	-2.6	16.7	-35.8	-15.2	26.0
MSCI EM Latin America (Net Return)^^	4.4	19.5	-30.2	-17.8	22.2
US Dollars:
Net asset value^	10.7	26.5	-28.3	-18.0	1.4
Share price	3.5	21.5	-31.1	-15.6	5.9
MSCI EM Latin America (Net Return)^^	10.9	24.3	-25.2	-18.2	2.8

^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:	366.86p
Net asset value – cum income:	371.53p
Share price:	326.00p
Total Assets#:	£159.4m
Discount (share price to cum income NAV):	12.3%
Average discount* over the month – cum income:	13.7%
Net gearing at month end**:	9.0%
Gearing range (as a % of net assets):	0-25%
Net yield##:	6.5%
Ordinary shares in issue (excluding 2,181,662 shares held in treasury):	39,259,620
Ongoing charges***:	1.1%

#Total assets include current year revenue.
##The yield of 6.5% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 27.34 cents per share) and using a share price of 427.88 US cents per share (equivalent to the sterling price of 326.00 pence per share translated in to US cents at the rate prevailing at 31 July 2020 of $1.3125 dollars to £1.00).

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 (paid on 06 February 2020).
2020 Q1 interim dividend of 4.59 cents per share (paid on 20 May 2020).
2020 Q2 interim dividend of 5.57 cents per share (payable on 11 August 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 2019.

Geographic Exposure	% of Total Assets^	% of Equity Portfolio *		MSCI EM Latin America Index
Brazil	69.7	69.9		66.1
Mexico	17.7	17.8		19.9
Chile	5.1	5.1		7.3
Argentina	4.9	4.9		1.6
Peru	1.6	1.6		2.9
Panama	0.7	0.7		0.0
Colombia	0.0	0.0		2.2
Net current assets(inc. fixed interest)	0.3	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 9.3% of the Company’s net asset value.

Sector	% of Equity Portfolio *	% of Benchmark
Financials	22.1	27.0
Consumer Discretionary	20.0	7.3
Materials	19.2	16.5
Energy	9.9	9.5
Consumer Staples	8.8	15.0
Utilities	7.1	6.8
Communication Services	5.2	6.5
Industrials	3.8	6.5
Real Estate	3.3	1.2
Information Technology	0.6	1.5
Health Care	0.0	2.2
	-----	-----
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	9.4	8.4
Petrobras - ADR	Brazil	8.1	7.1
America Movil	Mexico	5.2	4.1
B3	Brazil	5.2	4.9
Banco Bradesco	Brazil	4.1	4.7
Itau Unibanco	Brazil	3.8	4.9
AmBev	Brazil	3.3	2.4
Grupo Mexico	Mexico	3.2	1.5
Ayfa	Brazil	3.2	0.0
Lojas Americanas	Brazil	3.2	1.2

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

For the month of July 2020, the Company’s NAV returned +4.1%¹ with the share price moving -2.6%¹. The Company’s benchmark, the MSCI EM Latin America Index, returned +4.4%¹ on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin American equities were up in July, outperforming developed and emerging market equities. All countries in Latin America posted positive performance and were led by Brazil and Argentina. This was driven by a global rebound and increase in mobility trends after distancing measures continued to be lifted. Latin American currencies strengthened in this environment.

Positioning in Peru contributed most to relative performance, while stock selection in Brazil detracted most on relative returns over the period. The offbenchmark holding of a Brazilian retailer, Via Varejo, was the top contributor on a relative basis as the company continues to see strong gross merchandise volume growth and should be better insulated from Covid impact. The absence in the portfolio of the Mexican retailer, Wal Mart de Mexico (Walmex), was also beneficial to relative performance as the stock declined after reporting second quarter 2020 results. On the other hand, an overweight position in the steel producer Ternium detracted most from relative performance as steel prices declined in the US and the overall steel market in Mexico has been weak given the impact of lockdown on steel demand. The absence of a holding in Weg, a Brazilian company with worldwide operations in the electrical engineering, power and automation technology areas, weighed on returns as the stock rose after reporting good second quarter results.

Over the month we added to Grupo Mexico, the largest mining company in Mexico and one of the largest copper producers in the world, to increase our copper exposure. We participated in the IPO of Vasta Platform, an educational technology provider in Brazil, as we see growth potential via M&A activity and margin improvement as legacy business rolls off. We reduced exposure to Brazil by cutting the holding of CEMIG (Companhia Energética de Minas Gerais), a power generator and distributor in Brazil, following strong relative outperformance in recent months. We sold the portfolio’s holding in Klabin, Brazil's paper producer and exporter, given low conviction in the name. The portfolio ended the month being overweight Brazil and Argentina, while being underweight Colombia, Chile, Peru and Mexico. At the sector level, we are overweight consumer discretionary and materials. We are underweight consumer staples and financials.

The coronavirus and associated Covid-19 disease have spread throughout the world, prompting ’social distancing’ and often strict government control measures throughout developed and emerging markets, Latin America included. While China has been gradually easing restrictions since late February, most other emerging economies are still passing through the ‘peak lockdown’ phase. Policy responses have been considerable, but many markets in Latin America—notably those reliant on foreign capital flows—face constraints in the scale of their response, in addition to questions about the robustness of their health systems. We have seen lockdowns easing modestly by June and expect more significant easing in the second half of the year. Most governments plan to do so on this timeframe, though it should be noted that almost everywhere, government control measures have been kept in place longer than originally envisaged. Activity in the industrial sector and in parts of services where ‘social distancing’ is less of a concern should rebound relatively quickly. Still, we do not expect most economies to return to their pre-crisis level of GDP until 2021. The extent to which policy action now limits business bankruptcies and a breakdown in the labour market will be an important differentiator of the speed of recovery.

Sources:
¹ BlackRock, as of 31 July 2020.

24 August 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.