BLACKROCK FRONTIERS INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK FRONTIERS INVESTMENT TRUST PLC All information is at 30 November 2013 and unaudited.
Performance at month end with net income reinvested
One Three Six One Since
month months months year launch*
Sterling: Share price -1.8% 2.8% 6.1% 44.6% 21.9% Net asset value 1.2% 2.4% 2.7% 33.0% 20.5% MSCI Frontiers Index (NR) -0.2% 1.8% -3.1% 23.0% 5.5% MSCI EM Markets (NR) -3.4% 3.9% -5.3% 1.4% -6.0%
US Dollars: Net asset value 3.2% 8.5% 11.1% 36.1% 26.8% MSCI Frontiers Index (NR) 1.8% 7.8% 4.7% 25.8% 10.9% MSCI EM Markets (NR) -1.5% 10.0% 2.3% 3.7% -1.2%
Sources: BlackRock and Standard & Poor's Micropal * 17 December 2010.
At month end US Dollar: Net asset value - capital only: 178.26c Net asset value - cum income: 178.26c Sterling: Net asset value - capital only: 108.74p Net asset value - cum income: 108.74p Share price: 112.00p Total assets (including income): £163.8m Premium to cum-income NAV: 3.0% Gearing: nil Gearing range (as a % of gross assets): 0-20% Net yield: 3.1% Ordinary shares in issue: 150,621,621
Benchmark Sector Analysis Gross assets(%)* Country Analysis Gross assets(%)*
Financials 33.2 United Arab Emirates 11.1 Energy 15.7 Nigeria 10.6 Consumer Staples 13.4 Saudi Arabia 10.2 Health Care 9.5 Qatar 9.9 Telecommunication 8.7 Bangladesh 7.1 Industrials 8.6 Kazakhstan 5.9 Materials 6.5 Iraq 5.7 Consumer Discretionary 2.9 Kuwait 4.8 Utilities 2.0 Pakistan 4.5
----- Sri Lanka 3.6 Total 100.5 Oman 3.3
----- Vietnam 3.2 Short positions -1.6 Turkmenistan 2.9
===== Panama 2.6
Pan Africa 2.1
Short positions - 1.6
*reflects gross market exposure from contracts for difference (CFDs)
31.12 31.01 28.02 31.03 30.04 31.05 30.06 31.07 31.08 30.09 31.10 30.11
2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013
% % % % % % % % % % % %
Long 103.4 105.1 104.1 99.5 99.2 99.8 95.9 103.2 98.9 98.8 100.4 100.5 Short 5.2 3.5 1.2 1.2 1.2 1.1 2.5 3.0 3.3 1.4 1.6 1.6 Gross 108.6 108.6 105.3 100.7 100.4 100.9 98.4 106.2 102.2 100.2 102.0 102.1 Net 98.2 101.6 102.9 98.3 98.0 98.7 93.4 100.2 95.6 97.4 98.8 98.9
Ten Largest Equity Investments
Company Country of Risk % of gross assets
Zenith Bank Nigeria 5.2% Emaar Properties United Arab Emirates 4.2% Doha Bank Qatar 3.9% Genel Energy Iraq 3.4% Halyk Bank Kazakhstan 3.4% Square Pharmaceuticals Bangladesh 3.2% Qatar Gas Transportation Qatar 3.1% Dragon Oil Turkmenistan 2.9% Qatar National Bank Qatar 2.9% First Gulf Bank United Arab Emirates 2.7%
Commenting on the markets, Sam Vecht, representing the Investment Manager noted:
The MSCI Frontier Market Index returned 1.8% in November. Frontier Markets outperformed mainstream Emerging Markets which fell by 1.5% as investors shifted their assets into European and US markets amid encouraging signs of economic growth across developed markets (all percentages calculated on a US Dollar basis with net income reinvested). Outflows from Emerging Markets were led by ETFs which saw a combined outflow of around $3.5bn from Emerging Markets over the month.
Argentina was once again the strongest performer, rising by 21%. Investors were encouraged by a proposed agreement between Spain, Argentina and Mexico to resolve the dispute over the nationalised Argentinean energy company YPF.
Kazakhstan also performed strongly, led by Halyk Bank which rose by 22% over the month after announcing strong third quarter results. Loan growth accelerated to reach 8% quarter-on-quarter and 26% year-on-year which, combined with an expansion of Net Interest Margin, led to the bank reporting a rise in Net Income of 46% over the previous quarter.
Kuwait was a notable underperformer over the month, falling by 2.6%.
The BlackRock Frontiers Investment Trust's NAV increased by 3.2% in November, outperforming the benchmark by 1.4%. Year to date, the Company's NAV has returned 31.3% compared to the MSCI Frontier Markets Index return of 23.2%.
UAE Healthcare provider, NMC, outperformed in November. The stock rose sharply following the announcement that under the new medical law all residents will be required to have compulsory health insurance cover which will significantly increase demand at NMCs facilities.
Caribbean stock, Cable and Wireless Communications rose following the announcement that they had extended their mobile licence in Panama for 20 years at a cost of $100m, which removed some of the future uncertainty for the company. The Iraqi oil stocks also contributed strongly to performance on the expectation of imminent export sales through the pipeline to Turkey.
Kyrgyzstan miner, Centerra was the largest individual detractor from performance over the month which continued to suffer over speculation that the Kyrgyz government would renegotiate the terms of the company's mining licence.
In November, the Company initiated a new position in Romanian Energy firm, Romgaz. The company successfully completed an Initial Public Offering (IPO) at the beginning of the month. The government has undertaken to liberalise prices in the energy sector as part of a reform agenda agreed with the IMF and on the back of this the stock looks attractively valued.
The Company sold its position in Iraqi-focussed energy company DNO. The stock has risen in excess of 100% in 2013 as the likelihood of oil exports from the region has increased with the completion of the pipeline from Kurdistan to Turkey. Whilst we remain positive on the region, we have taken the opportunity to rotate our exposure into stocks where performance has been more muted this year and have recently initiated a position in another Iraqi oil company, Genel Energy.
With dedicated Frontier AUM doubling in 2013 and investment banks devoting resource to the area, we expect a raft of private frontier companies to come to the market over the next 12 months, as their owners are allured by the possibility of quantifying and crystallising wealth. This is an essential part of the development phase of Frontier Markets, as the size of frontier country stock markets is typically small relative to GDP. It will also provide some great opportunities to invest in new businesses. However, a fully-fledged IPO boom can be a bearish signal as surges in stock issuance often signal market peaks. The good news is there have been very few IPOs in 2013 and a full scale boom will likely need markets to move considerably higher first.
More than 2bn people live in Frontier Markets but until now they have attracted little investor attention. With their strong GDP growth, positive demographic profile, low debt burden and relatively low correlation to developed and emerging markets, we think frontier markets are a great place to invest for those who have both a long term horizon and wish to see capital and income growth. In a changing world, we believe that opportunities abound for unconventional investors.
17 December 2013
Latest information is available by typing www.blackrock.co.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 the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.
-0- Dec/17/2013 15:55 GMT