Portfolio Update

The information contained in this release was correct as at 30 November 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 November 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^	-4.3	4.2	33.4	2.1	11.8
Share price	-6.7	-1.0	22.7	-2.1	10.1
MSCI EM Latin America (Net Return)^^	-2.9	4.2	33.6	7.8	17.2
US Dollars:
Net asset value^	-1.0	6.7	20.1	-5.9	-1.7
Share price	-3.5	1.3	10.4	-9.9	-3.2
MSCI EM Latin America (Net Return)^^	0.5	6.6	20.3	-0.8	3.1

^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:	420.93p
Net asset value - including income:	441.67p
Share price:	371.50p
Total assets#:	£138.6m
Discount (share price to cum income NAV):	15.9%
Average discount* over the month – cum income:	13.0%
Net gearing at month end**:	5.4%
Gearing range (as a % of net assets):	0-25%
Net yield##:	5.8%
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 5.8% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 25.79 cents per share) and using a share price of 442.42 US cents per share (equivalent to the sterling price of 371.50 pence per share translated in to US cents at the rate prevailing at 30 November 2022 of $1.1909 dollars to £1.00).

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 (paid on 12 August 2022).
2022 Q3 Interim dividend of 6.08 cents per share (paid on 09 November 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.
*** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for the year ended 31 December 2021.

Geographic Exposure	% of Total Assets	% of Equity Portfolio *	MSCI EM Latin America Index
Brazil	59.2	59.8	61.0
Mexico	27.7	28.0	27.6
Chile	3.7	3.8	6.5
Argentina	3.2	3.2	0.0
Peru	2.9	3.0	3.2
Panama	2.2	2.2	0.0
Colombia	0.0	0.0	1.7
Net current Assets(inc. fixed interest)	1.1	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 6.6% of the Company’s net asset value.

Sector	% of Equity Portfolio*	% of Benchmark*
Financials	30.2	24.0
Materials	20.3	23.5
Consumer Staples	16.8	15.0
Energy	9.2	11.0
Industrials	7.1	8.3
Real Estate	6.2	0.6
Health Care	4.0	1.9
Communication Services	2.4	6.7
Consumer Discretionary	2.3	2.3
Information Technology	1.5	0.5
Utilities	0.0	6.2
	-----	-----
Total	100.0	100.0
	=====	=====

*excluding net current assets & fixed interest

Company	Country of Risk	% of Equity Portfolio	% of Benchmark
Vale – ADS	Brazil	9.0	11.6
Petrobrás – ADR:	Brazil
Equity		4.6	3.8
Preference Shares		2.9	4.3
Banco Bradesco – ADR	Brazil	6.8	3.6
FEMSA - ADR	Mexico	6.3	2.8
AmBev – ADR	Brazil	5.7	2.6
Itaú Unibanco – ADR	Brazil	5.6	4.3
Grupo Financiero Banorte	Mexico	5.2	3.7
B3	Brazil	4.9	2.6
Cemex - ADR	Mexico	3.0	1.2
Credicorp	Peru	2.9	2.0

Commenting on the markets, Sam Vecht and Christoph Brinkmann, representing the Investment Manager noted;

For the month of November 2022, the Company’s NAV returned -4.2% with the share price moving -6.7%.¹ The Company’s benchmark, the MSCI EM Latin America Index, returned -2.9% on a net basis (all performance figures are in sterling terms with dividends reinvested)¹.

Security selection in Mexico contributed most to relative performance, while security selection in Brazil has been a detractor. At the stock level, our overweight position in FEMSA, a Mexican beverage and retail company, contributed most to relative performance. The company beat Q3 earnings estimates due to strong operating leverage at its core business, the Oxxo convenience store chain. Copa, an airline company in Panama, also contributed to relative performance as the company saw increased bookings for both leisure and business travelers. On the other hand, our overweight position in Brazilian healthcare company, Hapvida, detracted from relative returns. The operating environment for the Brazilian health insurance sector remains difficult, as medical loss ratios remain high (due to high frequency) and price increases only slowly starting to feed through. Hapvida reported one more weak quarter as a result. Brazilian car rental company, Movida, also detracted from returns as the company is facing a tough competitive environment and a normalization of used-car margins. 

Over the month we added to Brazilian exchange, B3, which trades on a very attractive valuation and will benefit from a decline in interest rates next year. We have rotated within Brazilian banks from Itau into Bradesco, as the latter sold off aggressively on an increase in non-performing loans, that we think the bank will weather well on a 12-18 month view due to strong capital position.  We sold our holding of Brazilian medical education company, Afya, in order to consolidate the portfolio.

The portfolio ended the month being overweight Argentina, Panama, Brazil, and Mexico, while being underweight Chile and Colombia. At the sector level, we are overweight financials and real estate, while we are underweight utilities and communication services.

The fundamentals around Latin American equities have steadily improved from a challenging 2021 as investors seemingly learn to live with the region’s political risk. Latin American currency remains relatively cheap at current levels and the combination of high real rates and low valuations has been attracting investors to increase regional exposure. Latin American central banks were the first to raise rates last year and policy makers in the region have surprised markets with steep hikes this year. For example, Brazilian policy makers have increased borrowing costs to the highest levels in almost five years. As a result, Latin America is considered by many to be ahead of the curve from a monetary policy standpoint, relative to developed markets.  In terms of positioning, we have been favouring domestic stocks that are more sensitive to interest rates in Brazil on the view that the current policy rates of 13.75% are very attractive relative to inflation, with the latest CPI (Consumer Price Index) print of November coming in at 5.90% year-on-year. The Brazilian financial markets are currently focused on every headline that is coming out of the transition team of president-elect Lula and seem to miss the bigger macroeconomic cycle. Current interest rates already reflect a deep skepticism of future fiscal policy, and the outcomes seem skewed positively to us. Although Brazilian politics is creating plentiful market noise, global investors seem to be ready to put money to work in local Latin American equity markets as other Emerging Market nations such as China and Russia grapple with their own issues.  We would argue that for multiple reasons Latin Amercia would seem well-positioned at present.  These include:  i) geographic and economic insulation from the recent global challenges; ii) broad exposure to commodities; iii) cheap currencies; iv) attractive valuations; and most importantly v) proactive monetary policy.

¹Source: BlackRock, as of 30 November 2022.

21 December 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.