Portfolio Update

The information contained in this release was correct as at 30 September 2021.  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 September 2021 and unaudited.
 

Performance at month end with net income reinvested
 

	One month %	Three months %	One  year %	Three years %	Five years %
Sterling:
Net asset value^	-8.7	-12.9	21.1	-6.6	4.3
Share price	-7.0	-14.1	18.5	0.1	8.6
MSCI EM Latin America (Net Return)^^	-8.5	-11.1	22.1	-7.2	5.6
US Dollars:
Net asset value^	-10.5	-15.0	26.3	-3.4	8.3
Share price	-8.9	-16.2	23.6	3.5	12.7
MSCI EM Latin America (Net Return)^^	-10.3	-13.3	27.3	-4.0	9.6

^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:	382.16p
Net asset value - including income:	388.98p
Share price:	346.00p
Total assets#:	£166.0m
Discount (share price to cum income NAV):	11.1%
Average discount* over the month – cum income:	13.2%
Net gearing at month end**:	5.7%
Gearing range (as a % of net assets):	0-25%
Net yield##:	6.2%
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 6.2% is calculated based on total dividends declared in the last 12 months as at the date of this announcement as set out below (totalling 28.80 cents per share) and using a share price of 466.56 US cents per share (equivalent to the sterling price of 346.00 pence per share translated in to US cents at the rate prevailing at 30 September 2021 of $1.3484 dollars to £1.00).

2020 Q4 Final dividend of 7.45 cents per share (paid on 08 February 2021).

2021 Q1 interim dividend of 6.97 cents per share (paid on 10 May 2021).

2021 Q2 interim dividend of 7.82 cents per share (paid on 6 August 2021).

2021 Q3 interim dividend of 6.56 cents per share (payable on 8 November 2021).

*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 2020.

Geographic Exposure	% of Total Assets	% of Equity Portfolio *	MSCI EM Latin America Index
Brazil	56.7	58.3	60.8
Mexico	26.9	27.6	26.2
Chile	6.7	6.9	6.0
Peru	2.8	2.9	2.4
Argentina	2.4	2.5	2.2
Panama	1.8	1.8	0.0
Colombia	0.0	0.0	2.4
Net current assets (inc. fixed interest)	2.7	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 8.7% of the Company’s net asset value.

Sector	% of Equity Portfolio*	% of Benchmark*
Financials	23.5	23.2
Materials	19.8	21.4
Consumer Staples	14.2	16.0
Communication Services	7.2	7.6
Consumer Discretionary	7.0	4.7
Industrials	6.8	6.3
Energy	6.5	9.9
Health Care	5.5	3.0
Information Technology	3.7	2.6
Real Estate	3.6	0.8
Utilities	2.2	4.5
	-----	-----
Total	100.0	100.0
	=====	=====

*excluding net current assets & fixed interest

Company	Country of Risk	% of Equity Portfolio	% of Benchmark
Vale – ADS	Brazil	7.4	9.6
Petrobrás – ADR:	Brazil
Equity		3.7	3.3
Preference Shares		2.8	4.1
Banco Bradesco – ADR	Brazil	5.4	4.1
América Movil – ADR	Mexico	5.0	5.3
Grupo Financiero Banorte	Mexico	4.3	3.0
Walmart de México y Centroamérica	Mexico	4.1	3.0
B3	Brazil	4.1	2.5
Cemex – ADR	Mexico	3.7	1.9
Notre Dame Intermedica Participaçes	Brazil	3.1	1.2
Credicorp	Peru	2.9	1.3

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

For the month of September 2021, the Company’s NAV returned -8.7% with the share price moving -7.0%. The Company’s benchmark, the MSCI EM Latin America Index, returned –8.5% 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 with Brazil and Mexico leading the decline.

Allocation in Panama contributed the most to relative performance over the period while allocation in Colombia detracted most from relative returns. An off-benchmark holding of Marfrig Global Foods, a Brazilian food processing company, was the top contributor on the back of strong operating results and attractive beef cycle dynamics. An off-benchmark holding of Panamanian airline company, Copa Holdings, also benefitted the portfolio as the company is well positioned for the return of demand to underserved markets with limited substitutions for air travel. The portfolio’s lack of a position relative to our benchmark in Brazilian materials company, Companhia Sidergica, benefitted relative returns as the stock underperformed on the back of lower iron ore prices. Iron ore prices have declined as China has seen a significant slowdown in steel production following general economic weakness, exacerbated by tightening pollution controls and energy rationing for industrial companies. On the other hand, an overweight in Via Varejo, a Brazilian retail company, detracted most from relative performance. We remain encouraged by the digital transformation cycle spurred on by Via Varejo’s management and ownership changes and our base case is that it will remain a relevant store and online player in its key categories of electronics, appliances, and furniture; however, breaking into the top 3 of online marketplaces will likely be more challenging given increasing competition and heavy investment in logistics from peers, announced in the month. For example, recently Amazon Brazil announced the start of offering one day delivery in 50 states for Amazon Prime members for free, raising concerns on competition in Brazil. A lack of holding in Weg, a Brazilian motors and generators company, also weighed on relative returns. Our view is that the stock remains expensive and rising input costs are likely to weigh on near-term profits.

Over the month we added to Natura & Co., a Brazilian cosmetics company, as recent meetings with management confirm our view that company is progressing well on extraction of synergies with their recent acquisitions of the Avon brand.  We reduced exposure to Mexican telecommunications company, America Movil, taking profits as the stock has performed well on the back of better-than-expected results and deleveraging, leading to greater return of capital to shareholders. We sold our holding in Brazilian airline company, Azul, to reflect our conviction on the stock. Rising interest rates, spiking currency and rising oil prices present an unfavourable scenario for a highly leveraged domestic airline with a significant level of liabilities coming due in near term. The portfolio ended the period being overweight to Mexico and Panama, whilst being underweight to Colombia and Argentina. At the sector level, we are overweight consumer discretionary and real estate, and underweight energy and utilities.

It has been a tough period for Latin America, with many countries hit hard by the COVID-19 crisis. However, we see a strong case for better times ahead for the region as the world rebuilds after the pandemic, and Latin America may be one of the most important beneficiaries of recovery in the global economy. As the region rebuilds, it will have some important tailwinds. Perhaps the most significant is rising 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. The Latin America region has some of the world’s most abundant supplies of  lithium, iron ore and copper with some of the longest-life reserves at a low cost in Brazil, Chile, and Peru. There are also broader factors that should support economic growth. Across Latin America, a growing middle class is fueling domestic consumption and, after a brief hiatus during the pandemic, this spending appears to be resuming. As businesses in the US look to diversify their supply chains opportunities are being created in Mexico, particularly along the northern border, in the manufacturing sector.  Importantly, a rich seam of new companies listing on the stock market is creating more opportunities all the time. The buoyancy of the Brazilian IPO (Initial Public Offering) market is perhaps the best example. 2020 was a bumper year for Brazilian IPOs. 28 companies listed on the main exchange, raising BRL$43.7 billion (US$8.3 billion) desspite the pandemic. This was almost four times the previous year’s figure and the highest level since the giddy pre-crash optimism of 2007. This year looks set to be even more promising; over 40 companies have already said they want to list on Sao Paulo’s B3 exchange this year. There are sound reasons for this, with excess global liquidity, favourable macroeconomic conditions, and increased financial awareness among Brazilian investors, all supporting new issuance in Brazil. This is bringing new sectors and more choice for investors in the region. Within the portfolio, we have exposure to structural growth themes in the region including healthcare, e-commerce and convenience stores. Against this positive backdrop, we see anecdotal evidence that investors are moving away from China – which has a lot of technology names – to more cyclical markets. Latin American markets, with their focus on materials, energy and financials, are a key beneficiary. Latin America is lightly represented in emerging market benchmarks and has generally been under-owned, so it only takes a small change in sentiment to have a significant impact. We expect more and more investors to rediscover the huge opportunities in this fascinating region.

¹Source: BlackRock, as of 30 September 2021.

19 October 2021

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.