Portfolio Update

The information contained in this release was correct as at 31 May 2020.  Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK LATIN AMERICAN INVESTMENT TRUST PLC (LEI: UK9OG5Q0CYUDFGRX4151)
All information is at 31 May 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^	8.9	-27.5	-33.8	-20.2	-0.9
Share price	8.7	-24.4	-29.4	-15.6	1.0
MSCI EM Latin America (Net Return)^^	8.6	-23.4	-30.5	-20.2	0.5
US Dollars:
Net asset value^	6.7	-29.8	-35.1	-23.7	-19.8
Share price	6.5	-26.8	-30.7	-19.2	-18.2
MSCI EM Latin America (Net Return)^^	6.4	-25.9	-31.9	-23.6	-18.5

^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:	336.60p
Net asset value – cum income:	336.82p
Share price:	307.50p
Total Assets#:	£145.9m
Discount (share price to cum income NAV):	8.7%
Average discount* over the month – cum income:	10.7%
Net gearing at month end**:	10.4%
Gearing range (as a % of net assets):	0-25%
Net yield##:	7.9%
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 8.1% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 30.92 cents per share) and using a share price of 380.15 US cents per share (equivalent to the sterling price of 307.50 pence per share translated in to US cents at the rate prevailing at 31 May 2020 of $1.2363 dollars to £1.00).

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 (paid on 6 February 2020).
2020 Q1 interim dividend of 4.59 cents per share (paid on 20 May 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	64.0	64.1		61.5
Mexico	22.1	22.1		23.2
Chile	5.8	5.8		7.3
Argentina	5.6	5.6		1.9
Peru	1.5	1.5		3.3
Panama	0.9	0.9
Colombia				2.8
Net current assets(inc. fixed interest)	0.1	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 10.3% of the Company’s net asset value.

Sector	% of Equity Portfolio *	% of Benchmark
Financials	20.4	26.9
Materials	17.3	15.3
Consumer Discretionary	14.3	6.7
Consumer Staples	12.4	16.4
Energy	10.4	9.2
Utilities	7.2	6.4
Communication Services	7.1	7.8
Industrials	5.6	6.5
Real Estate	3.6	1.1
Health Care	1.7	2.3
Information Technology		1.4
	-----	-----
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	9.3	7.1
Petrobras - ADR	Brazil	8.7	6.9
America Movil	Mexico	7.1	5.2
B3	Brazil	4.1	4.0
Ternium	Argentina	4.0
Banco Bradesco	Brazil	3.9	4.6
Walmart de Mexico y Centroamerica	Mexico	3.7	3.0
B2W CIA Digital	Brazil	3.5	0.8
AmBev	Brazil	3.3	2.5
Itau Unibanco	Brazil	3.0	4.7

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

For the month of May 2020, the Company’s NAV returned +8.9%¹ with the share price moving +8.7%¹. The Company’s benchmark, the MSCI EM Latin America Index, returned +8.6%¹ on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin America equities outperformed broader Emerging Markets in May. The positive performance was led by Argentina, Brazil and Mexico, and was driven by a global rebound and slight increase in mobility trends after distancing measures started to be lifted. Latin American currencies also strengthened in this environment.

Allocation to Argentina contributed most to relative performance returns during the period and stock selection in Brazil detracted most from relative returns. An off-benchmark holding of Ternium, a steel company in Latin America, was the top contributor on a relative basis as the company is nearing a peak in their capex cycle, which will lead to improved free cash flow generation over the next 12 months. In addition, organic volume and dividend growth also distinguishes Ternium from its peers. An overweight position in Brazilian online retailer, B2W, also benefited the portfolio during the month, as the company continues to see strong gross merchandise volume growth and should be better insulated from the impact of COVID-19, relative to brick and mortar heavy competitors. On the other hand, an off-benchmark holding of Afya, a Brazil-based medical education group, detracted most from relative performance as the stock gave up some of its previously strong gains. An off-benchmark holding of Qualicorp Consultoria, a healthcare insurer in Brazil, also weighed on relative returns as the stock declined after the company replaced its CFO. 

Over the month we continued adding to Vale, a Brazilian mining and iron ore company, on cheap valuations and economic normalizing in China post COVID-19, hence expectations of increased iron ore demand from China. We also added to America Movil, a Mexican telecommunication company, as we see favourable risk reward following a strong set of first quarter 2020 results. We initiated a position in Ambev as we see a potential recovery in beer volumes from depressed levels and a cheap valuation in the name. We reduced exposure to Brazil by trimming holdings in Banco Bradesco and Banco do Brasil. We sold our holding in Qualicorp Consultoria, which is sensitive to the current slow recovery of Brazilian economy. The Company ended the month being overweight to Brazil, Argentina and Mexico, while being underweight to Colombia, Chile and Peru. At the sector level, we are overweight to consumer discretionary and materials and underweight to financials and consumer staples.

The coronavirus and associated COVID-19 disease has spread throughout the world, prompting "social distancing" and often strict government control measures throughout developed and emerging markets, Latin America included. Whilst 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 expect lockdowns to ease modestly by June and more significantly 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 (Gross Domestic Product) 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:
¹BlackRock as at 31 May 2020
 

18 June 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.