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BlackRock Greater Europe Investment Trust Plc - Portfolio Update

By PR Newswire

PR Newswire

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 30 September 2017 and unaudited.

Performance at month end with net income reinvested
 

One
Month
Three
Months
One
Year
Three
Years
Launch
(20 Sep 04)
Net asset value (undiluted) -0.4% 6.1% 20.5% 54.3% 338.2%
Net asset value* (diluted) -0.4% 6.1% 20.5% 54.4% 338.6%
Share price 0.1% 5.2% 20.8% 54.9% 319.5%
FTSE World Europe ex UK -1.0% 3.6% 22.7% 46.8% 243.1%

* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
 

At month end

Net asset value (capital only): 341.66p
Net asset value (including income): 345.66p
Net asset value (capital only)1: 341.66p
Net asset value (including income)1: 345.66p
Share price: 328.25p
Discount to NAV (including income): 5.0%
Discount to NAV (including income)1: 5.0%
Net gearing: 5.9%
Net yield2: 1.6%
Total assets (including income): £329.4m
Ordinary shares in issue3: 95,295,953
Ongoing charges4: 1.07%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.65p per share for the year ended 31 August 2016 and an interim dividend of 1.75p per share for the year ending 31 August 2017.
3  Excluding 15,032,985 shares held in treasury.
4  Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2016.

Sector Analysis Total 
Assets 
(%) 
Country Analysis Total 
Assets 
(%) 
Industrials 31.1  Switzerland 15.9 
Health Care 17.5  France 15.4 
Consumer Services 12.9  Denmark 13.1 
Consumer Goods 12.4  Germany 12.3 
Technology 9.6  Netherlands 11.7 
Financials 8.8  Sweden 8.5 
Oil & Gas 4.5  Belgium 5.5 
Basic Materials 4.0  Russia 4.5 
Net current liabilities (0.8) Finland 3.5 
-----  Spain 3.2 
100.0  Ireland 2.8 
=====  Greece 1.7 
Israel 1.6 
Ukraine 1.1
Net current liabilities (0.8)
----- 
100.0 
===== 

   

Ten Largest Equity Investments
Company Country % of
Total Assets
SAP Germany 4.4
Unilever Netherlands 4.4
ASML Netherlands 4.1
Lonza Group Switzerland 4.0
Bayer Germany 4.0
Fresenius Medical Care Germany 3.9
Compagnie Financière Richemont Switzerland 3.7
Kering France 3.6
DSV Denmark 3.6
Wartsila Finland 3.5

Commenting on the markets, Stefan Gries, representing the Investment Manager noted:

During the month, the Company’s NAV fell by 0.4% and the share price rose by 0.1%. For reference, the FTSE World Europe ex UK Index returned -1.0% during the period.

Europe ex UK equities fell in September in Sterling terms, impacted by a weakening Euro. In local currency terms, we saw Continental European equities gaining over the month.

Assets which are more linked to the economic cycle led the market on the back of solid Purchasing Manager Index prints and business confidence surveys reaching new highs. The oil & gas sector performed strongly as Brent crude posted gains of 7.8% during the month. Defensives – assets less geared to the economic cycle - lagged as a ‘risk-on’ theme returned to the market.

Politics dominated the headlines as Germany went to the polls in the national elections. Although Angela Merkel won a fourth term as chancellor, her party had its poorest showing since 1949, gaining just 33% of the vote.

The European Central Bank (ECB) left all policies unchanged over the month. Mario Draghi said policymakers had a “very, very preliminary discussion” about how to phase out Quantitative Easing at its meeting, but that the Bank was likely to take the “bulk of decisions” on how to wind down its €60bn-a-month bond-buying programme at its next meeting in October.

The Company outperformed the reference index over the month. Sector allocation was the primary driver of returns; stock selection was positive but more muted.

On a sector basis, the higher allocation to industrials proved beneficial for performance as economic momentum continued to prove robust across Europe. Conversely, the lower allocation towards basic materials proved detrimental for performance over the month as commodity prices firmed.

Stock selection within the consumer goods sector was the most profitable area, with positive returns from a position in Renault. The group guided to updated synergies in their 6-year plan, highlighting a potential incremental gain of circa €700m per annum.

Elsewhere Volvo contributed following the announcement of new financial targets and later in the month saw share price gains as a shareholder suggested breaking up the company to realise more value. Building materials group CRH also provided positive returns on announcing an offer to buy Ash Grove, a cement business in the US Midwest.

Less positively, a holding in Greek Alpha bank detracted. After a strong rally over the summer as progress was made on the second review of the country’s third bailout, the Greek market gave up some of its gains in September due to International Monetary Fund statements calling for a €10bn recapitalization and Asset Quality Review for the Greek Banks. Whilst these requests were later withdrawn after being criticised by the EU, the Greek market remained subdued.

Outlook

The increasing breadth of the global economic expansion continues to provide a positive backdrop for European corporate earnings. The pick-up in sales growth has led to a clear recovery in profits feeding into a rebound in capex spending. With inflation remaining well below target we expect ECB policy to remain accommodative. Long term, with structural and demographic drivers keeping a lid on inflation in the Euro area, we believe we can enjoy a sustained period of growth without the need for substantial increases in interest rates. In terms of valuation, European equities are relatively inexpensive when compared with fixed income and especially in terms of dividend yield.

Improving demand growth, a low cost of capital and broad-based resilience in economic sentiment, underpin a positive stance for European equity markets.

16 October 2017

ENDS

Latest information is available by typing www.brgeplc.co.uk 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.

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