Source - PRN

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 May 2017 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 2.3 3.3 38.6 39.1 128.5 83.1
Net asset value 4.5 4.5 36.3 33.2 113.3 81.1
MSCI Frontiers Index (NR) 4.5 4.2 28.9 16.3 78.2 47.5
MSCI Emerging Markets Index (NR) 3.2 4.0 43.6 36.3 48.8 27.5
US Dollars:
Share price 2.1 7.1 22.9 7.1 92.0 52.1
Net asset value 4.3 8.4 20.8 2.6 79.2 50.2
MSCI Frontiers Index (NR) 4.3 8.1 14.4 -10.5 49.4 22.1
MSCI Emerging Markets Index (NR) 3.0 7.9 27.4 4.9 24.8 5.6

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end
Ordinary Shares
US Dollar
Net asset value - capital only: 183.02c
Net asset value - cum income: 188.33c
Sterling:
Net asset value - capital only: 141.77p
Net asset value - cum income: 145.88p
Share price: 150.00p
Total assets (including income): £256.0m
Premium to cum-income NAV: 2.8%
Gearing: Nil
Gearing range (as a % of gross assets): 0-20%
Net yield*: 3.5%
Ordinary shares in issue: 174,693,108
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 3.5% and includes the 2016 final dividend of 4.00 cents per share declared on 22 November 2016 and paid to shareholders on 17 February 2017 and the 2017 interim dividend of 2.70 cents per share announced on 25 May 2017 and payable to shareholders on 30 June 2017.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2016.
 

Sector Analysis Gross assets(%)* Country Analysis Gross assets(%)*
Financials 32.5 Argentina 15.8
Consumer Staples 17.1 Romania 9.9
Energy 11.2   Kuwait 9.4  
Telecommunication Services 9.4 Vietnam 8.2
Health Care 8.5 Kazakhstan 7.5
Materials 7.1 Bangladesh 7.2
Utilities 6.1 Egypt 6.0
Industrials 4.3 Ukraine 5.9
Information Technology 4.0 Morocco 5.5
Real Estate 3.3 Sri Lanka 5.4
Consumer Discretionary 1.5 Pakistan 5.0
            ----- Kenya 3.7
Total 105.0 Nigeria 3.3
----- Turkey 2.6
Short positions 0.0 Philippines 2.5
===== Colombia 2.0
Estonia 1.8
Saudi Arabia 1.7
Slovenia 1.6
-----
Total 105.0
-----
Short positions 0.0
=====

*reflects gross market exposure from contracts for difference (CFDs).

Market Exposure
 

30.06
 2016
    %
31.07
 2016
    %
31.08
 2016
    %
30.09
 2016
    %
31.10
 2016
    %
30.11
 2016
    %
31.12
 2016
    %
31.01
 2017
    %
28.02
 2017
    %
31.03
 2017
    %
30.04
 2017
    %
31.05
 2017
    %
Long 110.5 103.4 105.7 104.0 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0
Short  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0
Gross 110.5 103.4 105.7 104.0 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0
Net 110.5 103.4 105.7 104.0 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0


Ten Largest Equity Investments

Company Country of Risk % of gross assets
Halyk Savings Bank Kazakhstan 3.9
Equity Group Kenya 3.7
Mobile Telecommunications Kuwait 3.4
Pampa Energia Argentina 3.4
S.N.G.N. Romgaz Romania 3.3
MHP Ukraine 3.1
Grupo Financiero Galicia Argentina 3.1
Integrated Diagnostics Egypt 3.1
Square Pharmaceuticals Bangladesh 3.0
YPF - ADR Argentina 2.8


Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:

In May, the Company’s NAV rose by 4.3%, in line with its MSCI Frontier benchmark (on a US Dollar basis with net income reinvested). The MSCI Emerging Markets Index rose by 3.0% over the same period.

Stock selection dominated in Vietnam, with stocks held there contributing strongly to performance despite muted index performance (+0.2%) during the month.  Stock broker, Saigon Securities, was one of the leading positions, rising 13%.  The company benefits from both the higher valuation of the local exchange, and also the higher volumes trading on this local exchange which have approximately doubled year-to-date compared with 2016. 

Romanian exposure continues to benefit the Company.   The broader market gained +12% in May on the back of strong economic expansion, GDP rose by 5.7% in the first quarter of 2017 with all sectors contributing strongly to growth.  This helped the performance of long standing overweights in natural gas producer, Romgaz (+12%), and lender, BRD (+17%). 

Our position in Egyptian diagnostic testing company, Integrated Diagnostics Holdings, increased 19% during the month after reporting an inline first quarter trading update.  Whilst operating conditions remain tough post the 2016 currency devaluation, we believe the stock has an advantageous competitive position in a sector which should see structural growth.    Kenyan financial, Equity Group, was another strong contributor during the month, rising 21% as the market started to price the expected loosening of interest rate caps post the Kenyan election as opposition to the caps became more widespread within government. 

On the other hand, our underweight to Nigeria was one of the largest detractors in May as the market rallied +18% following April’s introduction of the “Investors and Exporters FX Window” which has helped to address key FX shortages in the economy.  Whilst we believe that the currency is likely to need to devalue further from these levels, the re-opening of the Trans Forcados pipeline and following increase in oil export volumes will provide some support for the current level.  We have increased our positions in the banking sector to take advantage of the attractive valuations which we feel adequately compensate for the risks taken. 

Pakistan had a volatile month driven by local investors trading ahead of MSCI’s reclassification to ‘emerging market’, ending the period up +2%. Citing the prior upgrades of Qatar and UAE as examples, investors expected the market to perform well into the upgrade as passive flows from Emerging Market funds entered the market. In the end, market performance was disappointing with the index selling off -8% from intramonth highs and continuing to sell off post month end.  We have reduced exposure on the view that the country is increasingly late cycle from a macro perspective and growing twin deficits are placing pressure on the currency. 

Broadly, Frontier Markets continue to exhibit strong GDP growth and low government debt levels, and represent an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world.

26 June 2017

ENDS

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 BlackRock’s website (or any other website) is incorporated into, or forms part of, this announcement