BLACKROCK FRONTIERS INVESTMENT TRUST PLC The information contained in this release was correct as at 31 May 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 FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 May 2022 and unaudited.
Performance at month end with net income reinvested.
| One month % |
Three months % |
One year % |
Three years % |
Five years % |
Since Launch* % | |
| Sterling: | ||||||
| Share price | -4.4 | 1.6 | 13.3 | 11.7 | 6.5 | 95.0 |
| Net asset value | -5.3 | 5.3 | 16.1 | 19.4 | 20.7 | 118.5 |
| Benchmark (NR)** | -3.8 | 5.3 | 22.6 | 11.8 | 29.2 | 89.2 |
| MSCI Frontiers Index (NR) | -6.7 | -3.2 | 1.1 | 9.9 | 18.1 | 74.2 |
| MSCI Emerging Markets Index (NR) | 0.1 | -1.3 | -8.8 | 15.8 | 23.4 | 57.4 |
| US Dollars: | ||||||
| Share price | -4.1 | -4.6 | 0.7 | 11.6 | 4.1 | 58.3 |
| Net asset value | -5.0 | -1.1 | 3.2 | 19.4 | 17.9 | 77.1 |
| Benchmark (NR)** | -3.4 | -1.1 | 8.7 | 11.8 | 26.1 | 54.2 |
| MSCI Frontiers Index (NR) | -6.4 | -9.0 | -10.3 | 9.9 | 15.3 | 40.8 |
| MSCI Emerging Markets Index (NR) | 0.4 | -7.3 | -18.9 | 15.7 | 20.5 | 27.3 |
Sources: BlackRock and Standard & Poor’s Micropal
* 17 December 2010.
** The Company’s benchmark changed from MSCI Frontier Markets Index to MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (net total return, USD) effective 1/4/2018.
| At month end | |
| US Dollar | |
| Net asset value - capital only: | 175.74c |
| Net asset value - cum income: | 179.88c |
| Sterling: | |
| Net asset value - capital only: | 139.45p |
| Net asset value - cum income: | 142.74p |
| Share price: | 129.50p |
| Total assets (including income): | £270.2m |
| Discount to cum-income NAV: | 9.3% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.1% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| Ongoing charges plus taxation and performance fee: | 2.4% |
*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.1% and includes the 2021 final dividend of 4.25 cents per share, declared on 1 December 2021, and paid to shareholders on 11 February 2022. Also included is the 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and payable to shareholders on 24 June 2022.
** Excluding 52,497,053 ordinary shares held in treasury.
***Calculated as a percentage of average net assets and using expenses, excluding Performance fees and interest costs for the year ended 30 September 2021.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | ||
| Financials | 34.8 | Saudi Arabia | 21.9 | ||
| Consumer Discretionary | 14.6 | Indonesia | 14.1 | ||
| Industrials | 14.1 | Vietnam | 8.9 | ||
| Materials | 13.4 | United Arab Emirates | 8.4 | ||
| Energy | 11.0 | Malaysia | 7.4 | ||
| Consumer Staples | 6.6 | Thailand | 7.4 | ||
| Real Estate | 5.8 | Kazakhstan | 5.6 | ||
| Information Technology | 3.2 | Greece | 5.5 | ||
| Utilities | 2.8 | Hungary | 4.2 | ||
| Health Care | 1.6 | Philippines | 4.2 | ||
| ----- | Qatar | 4.1 | |||
| 107.9 | Chile | 3.7 | |||
| ----- | Egypt | 2.9 | |||
| Short positions | -4.7 | Romania | 2.6 | ||
| ===== | Panama | 1.8 | |||
| Colombia | 1.4 | ||||
| Kenya | 1.3 | ||||
| Poland | 0.7 | ||||
| Pakistan | 0.6 | ||||
| Peru | 0.5 | ||||
| Ukraine | 0.4 | ||||
| Nigeria | 0.3 | ||||
| ----- | |||||
| Total | 107.9 | ||||
| ----- | |||||
| Short positions | -4.7 | ||||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 30.06 2021 % |
31.07 2021 % |
31.08 2021 % |
30.09 2021 % |
31.10 2021 % |
30.11 2021 % |
31.12 2021 % |
31.01 2022 % |
28.02 2022 % |
31.03 2022 % |
30.04 2022 % |
31.05 2022 % | |
| Long | 106.8 | 107.1 | 104.2 | 108.1 | 110.6 | 106.3 | 104.3 | 108.4 | 110.7 | 111.1 | 110.6 | 107.9 |
| Short | 4.6 | 2.3 | 0.6 | 0.4 | 0.4 | 0.4 | 1.0 | 1.9 | 3.3 | 2.3 | 1.8 | 4.7 |
| Gross | 111.4 | 109.4 | 104.8 | 108.5 | 111.0 | 106.7 | 105.3 | 110.3 | 114.0 | 113.4 | 112.4 | 112.6 |
| Net | 102.2 | 104.8 | 103.6 | 107.7 | 110.2 | 105.9 | 103.3 | 106.5 | 107.4 | 108.8 | 108.8 | 103.2 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 4.7 |
| Emaar Properties | United Arab Emirates | 4.6 |
| Bank Rakyat | Indonesia | 3.8 |
| Saudi British Bank | Saudi Arabia | 3.5 |
| FPT | Vietnam | 3.2 |
| Astra International | Indonesia | 3.1 |
| Mobile World | Vietnam | 3.0 |
| United International Transport | Saudi Arabia | 2.9 |
| Yanbu National Petrochemical | Saudi Arabia | 2.7 |
| BRD–Groupe Société Générale | Romania | 2.6 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company’s NAV returned -5.0% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which fell by 3.4% in May. For reference, the MSCI Emerging Markets Index ended the month up by 0.4% and the MSCI Frontier Markets Index returned -6.4% over the same period (all performance figures are on a US Dollar basis with net income reinvested).
Emerging Markets have seen a bit of a reprieve from prior months as lockdowns in Chinese metropolises Shanghai and Beijing start to ease. Meanwhile, Frontier Markets have given back some gains from earlier in the year, and concerns about inflation, interest rate rises, and slowing global economic growth have weight on sentiment. One notable development was European energy companies acquiescing to Russia’s demand to use a new payment system to avert more gas shut-offs.
In our universe, Latin America was the top performer – Chile (+18%), Colombia (+18%). Elsewhere, both the Middle East and South-east Asia gave back gains – UAE (-9%), Egypt (-8%), Saudi Arabia (-7%), Vietnam (-7%), Indonesia (-3%).
The Company benefited from its exposure to Latin America, notably Chilean company Albemarle (+35%) which is the largest producer of lithium for electric vehicle batteries globally; the company raised its outlook as tight supply and growing electric-vehicle demand forces battery makers to pay up for the metal. Chilean pulp and paper giant Empresas CMPC (+18%) was another key contributor. Political concerns have weighed on the stock price for a while, but we continue to like the fundamentals and believe they are yet to be fully reflected. Qatar Gas Tranport Co. (+9%) also did well, driven by expectations of new contract wins. On the other side, Emaar Properties (-11%) was a detractor. While the UAE property market still looks healthy, the stock was dragged down on fears of slowing economic growth. Kazakh fintech Kaspi (-19%) also hurt returns.
We made a few changes to the portfolio in May. We looked to reduce beta and take profits – trimming the likes of Air Arabia, Albemarle, Astra, ICT. We initiated a position in Malaysian financial Maybank, expressing a positive view on Malaysian macro as well as the rate sensitivity of the company. We added to Qatar Gas Transport Stock which we think will benefit from Qatar’s expansion north field. We also upped exposure in Thai Oil where the stock is yet to price the high refining margins that we are seeing in Asia. We exited Greek telecom name Hellenic Telecom and petrochemical conglomerate Industries Qatar, locking in profits. We also sold out of nitrogen fertilizer producer Fertiglobe which has done really well in line with the urea market, but we view these price levels as unsustainable and ultimately, detrimental to demand outlook.
It is worth noting that in May, we completed (in-person!) research trips to several countries in our universe. In Vietnam, economic activity has improved as the country has exited Covid lockdowns and we believe it can sustain this improvement. With the majority of food produced domestically, Vietnam has been relatively insulated from soft commodity price rises. Elsewhere in South-East Asia, we also saw encouraging signs of economic growth in Indonesia and Malaysia. The latter, in particular, is a beneficiary of tech outsourcing away from China. The picture is marginally different in Thailand – while the reopening is still underway, inflation, interest rates, and THB depreciation are worrisome headwinds. Thailand has also been hurt by the lack of Chinese tourists as borders remain tightly shut in the world’s second biggest economy. We also made our way to the Middle East, namely Qatar and Kuwait (having visited Saudi and UAE earlier in the year). They continue to be relatively attractive in the current environment of oil price tightness.
Overall, we continue to like prospects for our portfolio. In an environment of high inflation, rising rates, and pressure on global Central Banks, frontier markets stack up favourably. Valuations in frontier markets remain attractive relative to their own history and also relative to more developed markets. We believe our opportunity set is a compelling universe to generate alpha.
Sources:
1BlackRock as at 31 May 2022
2MSCI as at 31 May 2022
20 June 2022
ENDS
Latest information is available by typing www.blackrock.com/uk/brfi 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 BlackRock’s website (or any other website) is incorporated into, or forms part of, this announcement.
