Portfolio Update

The information contained in this release was correct as at 31 December 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 31 December 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^	-5.2	-2.8	20.2	-12.2	0.4
Share price	2.3	1.9	18.0	-7.7	7.1
MSCI EM Latin America (Net Return)^^	-5.0	-1.9	22.6	-5.0	6.5
US Dollars:
Net asset value^	-4.3	4.7	6.7	-20.2	-10.8
Share price	3.3	9.9	4.7	-16.2	-4.8
MSCI EM Latin America (Net Return)^^	-4.0	5.7	8.9	-13.7	-5.3

^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:	393.98p
Net asset value - including income:	418.53p
Share price:	380.00p
Total assets#:	£132.1m
Discount (share price to cum income NAV):	9.2%
Average discount* over the month – cum income:	10.1%
Net gearing at month end**:	6.7%
Gearing range (as a % of net assets):	0-25%
Net yield##:	8.5%
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 8.5% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 38.87 cents per share) and using a share price of 457.10 US cents per share (equivalent to the sterling price of 380.00 pence per share translated in to US cents at the rate prevailing at 31 December 2022 of $1.2029 dollars to £1.00).

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 9 November 2022).

2023 Q4 Interim dividend of 6.29 cents per share plus a Special Dividend of 13.00 cents per share (payable on 12 January 2023).

*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	59.7	60.0	62.1
Mexico	26.5	26.6	26.9
Chile	5.6	5.6	6.6
Argentina	3.2	3.2	0.0
Peru	2.4	2.4	3.1
Panama	2.2	2.2	0.0
Colombia	0.0	0.0	1.3
Net current Assets(inc. fixed interest)	0.4	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 7.1% of the Company’s net asset value.

Sector	% of Equity Portfolio*	% of Benchmark*
Financials	29.0	24.6
Materials	20.2	23.1
Consumer Staples	17.6	15.7
Energy	8.8	10.3
Industrials	7.1	8.1
Real Estate	6.5	0.7
Health Care	4.2	2.1
Consumer Discretionary	2.9	2.1
Communication Services	2.3	6.4
Information Technology	1.4	0.5
Utilities	0.0	6.4
	-----	-----
Total	100.0	100.0
	=====	=====

*excluding net current assets & fixed interest

Company	Country of Risk	% of Equity Portfolio	% of Benchmark
Vale – ADS	Brazil	9.5	12.0
Petrobrás – ADR:	Brazil
Equity		4.3	3.7
Preference Shares		2.8	4.1
Banco Bradesco – ADR	Brazil	6.8	3.6
FEMSA - ADR	Mexico	6.0	2.8
AmBev – ADR	Brazil	5.3	2.4
B3	Brazil	5.2	2.8
Itaú Unibanco – ADR	Brazil	4.9	4.3
Grupo Financiero Banorte	Mexico	4.8	3.5
Hapvida Participacoes	Brazil	2.8	0.8
Cemex - ADR	Mexico	2.8	1.1

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

For the month of December 2021, the Company’s NAV returned -5.2% with the share price moving 2.3%.¹ The Company’s benchmark, the MSCI EM Latin America Index, returned -5.0%¹ on a net basis (all performance figures are in sterling terms with dividends reinvested).

Latin American (LatAm) equities posted a positive performance over the month with Mexico and Brazil leading the rise.

Security selection in Mexico contributed the most to relative performance over the period while security selection in Brazil detracted most from relative returns. An off-benchmark holding of Argentinian IT and software development company, Globant, was the top contributor as the company has seen rapid revenue growth with industry leading margins through a strong set of accelerators that leverage AI and other technologies to reinvent key aspects of organizations. An overweight positon in Mexican airport operator, Grupo Aeroportuario del Pacifico, also benefitted the portfolio as the stock has outperformed following air traffic recovery. On the other hand, an overweight position in Rede D’Or, a Brazilian healthcare company, detracted most from relative performance as investors are concerned about rising inflation in Brazil and the impact it could have on margins for the hospital group. An off-benchmark holding in Brazilian electric services company, Neoenergia, also weighed on relative returns as the stock sold off along with other rate-sensitive sectors in Brazil.

Over the month we added to our position in America Movil, a Mexican telecommunications company, as the company has been experiencing strong profitability allowing for faster deleveraging of their balance sheet. We reduced our exposure to Falabella, a Chilean department store and sold our holding of Chilean chemicals company, Sociedad Quimica y Minera de Chile, to reduce exposure to political risk ahead of presidential Chilean presidential elections. The portfolio ended the period being overweight to Argentina and Mexico, whilst being underweight to Colombia. At the sector level, we are overweight financials and real estate, and underweight consumer staples and energy.

It has been a tough period for Latin America, with many countries hit hard by the COVID-19 crisis. However, we believe there are arguments to be made for better times ahead for the region as the world rebuilds after the pandemic and Latin America could be considered as a beneficiary of recovery in the global economy. As the region rebuilds, the Latin countries will have some important tailwinds. Perhaps the most significant are high commodity prices. Vast stimulus in the US and economic recovery across the world has pushed up demand for commodities after a period of tight supply. Global governments have ambitious, commodity-heavy infrastructure plans, particularly for green energy development. Latin America is one of the most abundant regions in the world for lithium, iron ore and copper with some of the longest-life reserves at a low cost in Brazil, Chile, and Peru. Despite this positive external backdrop, there are also broader risk factors that could weigh on regional economic growth. Across Latin America, a growing middle class is seeing domestic consumption pressured from rising inflation and increasing domestic interest rates. Latin American economies were boosted throughout the pandemic for the most part by expansionary monetary and fiscal policies. This has led to a rapid near-term rebound in demand given the reopening of economies at a time where rising energy costs, low inventories and supply chain issues have led to inflation exceeding expectations across the region. Central banks have aggressively reacted by hiking domestic interest rates to tame rising inflation. The impact of rising domestic rates will weigh on growth prospects, at the margin, but could be offset by continued loose fiscal policy. Over the next 12 months we will see presidential elections in Colombia and Brazil and one of the biggest debates is the amount of government spending to continue to support development. The outcome of these debates will have profound impact on growth going forward.  Against this challenging backdrop, we see Latin American equities as already pricing in a great deal of risk factors as a number of stocks and country indices are already trading at discounted valuations in both absolute and relative terms.

¹Source: BlackRock, as of 31 December 2022.

27 January 2023

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.