Emerging Markets  

Aberdeen Latin America trust hit by 'onslaught' of bad news

Aberdeen Latin America trust hit by 'onslaught' of bad news
 Credit: Wolfgang Rattay/Reuters

The chairman of the Aberdeen Latin American Income trust has said he is cautiously optimistic about the outlook for the region despite an "onslaught of bad news" over the past year.

The £45m trust saw its net asset value retreat by 18.8 per cent while its benchmark - a composite of the MSCI EM Latin American and JP Morgan EM Global Diversified - lost 10.9 per cent.

Richard Prosser, the trust's chairman, said Latin America had been plagued by issues such as the fall of the Argentinian Peso and a truckers' strike in Brazil as well as broader issues facing the developing world such as rising US interest rates, which hit emerging markets since they tend to borrow in dollars.

Despite this he said: "I remain cautiously optimistic about the outlook for Latin American markets, as the global appetite for risk assets has abated somewhat on the back of higher interest rates in the US and normalising monetary conditions elsewhere.

"Last year's synchronised global upturn has left several Latin American economies on a firmer footing where their healthy reserves and improved fiscal balances should shield the markets from external shocks.

"While the year under review was certainly very challenging [...] these volatile markets can create buying opportunities for the company as value in the manager's favoured stocks and markets can emerge."

 

The trust's results for the 12 months to the end of August revealed its performance was affected mainly by its fixed income holdings, with exposure to Argentina having made a large negative contribution, as the peso halved its value over the year.

Meanwhile the portfolio's equity holdings made a positive contribution overall, though stock selection in Brazil caused some underperformance, particularly when not holding the Brazilian state-owned oil giant Petrobas.

damian.fantato@ft.com