Portfolio Update

The information contained in this release was correct as at 30 June 2022.  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 30 June 2022 and unaudited.
 

Performance at month end with net income reinvested
 

	One month %	Three months %	One  year %	Three years %	Five years %
Sterling:
Net asset value^	-14.9	-18.7	-12.0	-23.8	-1.6
Share price	-18.2	-18.5	-8.2	-19.2	10.7
MSCI EM Latin America (Net Return)^^	-13.9	-15.3	-4.5	-13.9	3.9
US Dollars:
Net asset value^	-18.0	-25.1	-22.7	-27.3	-8.1
Share price	-21.2	-24.9	-19.3	-22.9	3.4
MSCI EM Latin America (Net Return)^^	-17.0	-21.9	-16.1	-17.9	-2.9

^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:	363.82p
Net asset value - including income:	378.12p
Share price:	355.00p
Total assets#:	£122.0m
Discount (share price to cum income NAV):	6.1%
Average discount* over the month – cum income:	3.7%
Net gearing at month end**:	9.8%
Gearing range (as a % of net assets):	0-25%
Net yield##:	6.1%
Ordinary shares in issue(excluding 2,181,662 shares held in treasury):	29,448,641
Ongoing charges***:	1.1%

#Total assets include current year revenue.
##The yield of 6.1% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 26.27 cents per share) and using a share price of 431.13 US cents per share (equivalent to the sterling price of 355.00 pence per share translated in to US cents at the rate prevailing at 30 June 2022 of $1.2145 dollars to £1.00).

2021 Q3 interim dividend of 6.56 cents per share (paid on 8 November 2021).
2021 Q4 Final dividend of 6.21 cents per share (paid on 08 February 2022).
2022 Q1 Interim dividend of 7.76 cents per share (paid on 16 May 2022).
2022 Q2 Interim dividend of 5.74 cents per share (payable on 12 August 2022).

*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 2021.

Geographic Exposure	% of Total Assets	% of Equity Portfolio *	MSCI EM Latin America Index
Brazil	58.9	58.8	61.9
Mexico	28.5	28.4	26.9
Chile	5.9	5.9	6.4
Peru	2.5	2.5	2.8
Argentina	2.3	2.3	0.0
Panama	2.1	2.1	0.0
Colombia	0.0	0.0	2.0
Net current Liabilities (inc. fixed interest)	-0.2	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 9.6% of the Company’s net asset value.

Sector	% of Equity Portfolio*	% of Benchmark*
Financials	27.3	23.4
Materials	20.9	23.2
Consumer Staples	14.5	14.6
Industrials	8.6	7.3
Energy	7.8	12.1
Communication Services	5.2	8.0
Real Estate	4.8	0.5
Health Care	4.0	2.0
Consumer Discretionary	3.8	2.5
Information Technology	2.3	0.4
Utilities	0.8	6.0
	-----	-----
Total	100.0	100.0
	=====	=====

*excluding net current assets & fixed interest

Company	Country of Risk	% of Equity Portfolio	% of Benchmark
Vale – ADS	Brazil	8.8	11.5
Petrobrás – ADR:	Brazil
Equity		4.4	4.2
Preference Shares		3.4	5.0
Banco Bradesco – ADR	Brazil	6.1	4.3
Itaú Unibanco – ADR	Brazil	5.7	4.1
Walmart de México y Centroamérica	Mexico	4.6	3.5
Grupo Financiero Banorte	Mexico	4.5	2.8
FEMSA - ADR	Mexico	4.3	2.6
B3	Brazil	4.0	2.5
AmBev – ADR	Brazil	3.9	2.4
Suzano Papel e Celulose	Brazil	3.1	1.4

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

For the month of June 2022, the Company’s NAV returned -14.9%¹ with the share price moving -18.2%¹. The Company’s benchmark, the MSCI EM Latin America Index, returned -13.9%¹ on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin American (LatAm) equities posted a negative performance over the month as growing fears of a US recession and continuation of strict COVID-19 related mobility restrictions in China led to declines in cyclical sectors (materials, energy and finanicals) in the month. From a country perspective, Colombia and Brazil led the decline. Historically, market environments that feature strong USD appreciation and coordinated monetary tightening provide headwinds to risk assets such as emerging market equities. The combination of these factors in June produced negative returns for LatAm equities.

The portfolio’s underweight allocation in Colombia contributed the most to relative performance over the period while security selection in Brazil detracted most from relative returns. An off-benchmark holding in Brazilian car rental company, Movida, detracted most from relative performance as the stock fell -24.8% in USD terms in June. We attribute the steep decline to external market conditions as tighter global liquidity and general risk aversion are headwinds for high-growth, small-cap stocks due to rising cost of capital assumptions which tend to depress market valuations in the near term. We believe the market has oversold this stock as the business case remains solid with sound operational performance and expectations for record level of margins this year with the potential to drive significant expansion in EBTIDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) growth. An underweight position in Mexican telecommunication company, America Movil, also detracted from performance as the company has performed well (benefitting from an increasing broadband client base and noteworthy 5G efforts). An overweight position in Chilean pulp and paper company, Empresas CMPC, was a top contributor to performance as the company is benefitting from current elevated pulp prices stemming from supply constraints. An off-benchmark holding in Mexican real estate company, Corporacion Inmobiliaria Vesta, also benefitted the portfolio as the company is seeing attractive demand dynamics for industrial warehousing on the back of near-shoring of supply chains benefitting Mexican property developers.

Over the month we added to Brazilian healthcare company, Hapvida. We continue to have strong conviction in the stock as we see the name trading at attractive valuations following recent underperformance. We believe there is room for margins to improve as elective surgeries increase their participation in the hospital’s procedural flow following COVID-19 related disruptions. We reduced exposure to the Brazilian bank, Banco Bradesco, to take profits following stock outperformance. We reduced exposure to Gerdau, Brazilian long steel producer, as rising rates pose threat to demand in US and Brazil. The portfolio ended the period being overweight to Mexico and Argentina, whilst being underweight to Colombia and Peru. At the sector level, we are overweight financials and real estate, and underweight energy and utilities.

The fundamentals around Latin American equities have steadily improved from a challenging 2021 as investors learn to live with the region’s political risk and focus instead on soaring local interest rates and commodity prices. High energy and materials prices helped to cushion Latin America from global headwinds over the first half of the year, but the region is set to face more challenges in the second half of 2022. GDP (Gross Domestic Product) growth in Latin America was generally better than we had anticipated in the first and second quarters as a spike in raw material prices provided a sizeable boost to the region’s export revenues. Brazil is the one key economy in the region where the consensus view looks overly downbeat. That said, growth is still likely to soften in the coming quarters. The Brazilian Central Bank has displayed a hawkish streak and, while the tightening cycle is near an end, we think policymakers will need to see improvement in inflation expectations before cutting rates. In the meantime, volatility is likely to build around October’s presidential election, providing opportunities to add to long-term winners in our opinion. Tight fiscal and monetary policy and slower growth in the US mean that Mexico’s economy is likely to stagnate over the next couple of quarters. As a result, we have reduced exposure in Mexico but remain optimistic towards real estate given increasing  external demand from nearshoring of supply chains away from Asia. Despite mounting challenges in the external environment, we would argue that for many reasons LatAm would seem well-positioned in the current context as the region provides:  i)  geographic and economic insulation from the recent geopolitical conflict; ii) long and wide commodities exposure that will offset supply constraints from Russia; iii) cheap currencies; iv) attractive valuation entry points; and v) proactive monetary policy stances.

¹Source: BlackRock, as of 30 June 2022.

27 July 2022

ENDS

Latest information is available by typing www.blackrock.com/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.