BlackRock Grtr Eur Portfolio Update
15 November 2017 - 1:02AM
UK Regulatory
TIDMBRGE
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 31 October 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Launch
Month Months Year Years (20 Sep 04)
Net asset value (undiluted) 1.8% 5.8% 19.9% 57.8% 346.0%
Net asset value* (diluted) 1.8% 5.8% 19.9% 57.9% 346.4%
Share price 3.9% 8.4% 21.1% 61.3% 335.8%
FTSE World Europe ex UK 1.5% 3.3% 19.9% 51.0% 248.2%
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): 347.49p
Net asset value (including income): 351.80p
Net asset value (capital only)1: 347.49p
Net asset value (including income)1: 351.80p
Share price: 341.00p
Discount to NAV (including income): 3.1%
Discount to NAV (including income)1: 3.1%
Net gearing: 2.8%
Net yield2: 1.6%
Total assets (including income): GBP335.2m
Ordinary shares in issue3: 95,295,953
Ongoing charges4: 1.10%
1 Diluted for treasury shares.
2 Based on a final dividend of 3.70p per share and an interim dividend of
1.75p per share for the year ended 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 2017.
Sector Analysis Total Country Analysis Total
Assets Assets
(%) (%)
Industrials 29.3 France 17.0
Health Care 17.5 Switzerland 16.0
Consumer Goods 16.0 Germany 14.0
Consumer Services 13.4 Netherlands 13.0
Technology 9.4 Denmark 12.1
Financials 7.9 Sweden 8.7
Oil & Gas 4.2 Belgium 5.7
Basic Materials 3.5 Russia 4.2
Net current liabilities (1.2) Spain 3.6
----- Finland 2.6
100.0 Israel 1.7
===== Greece 1.6
Ukraine 1.0
Net current (1.2)
liabilities
-----
100.0
=====
Ten Largest Equity Investments
Company Country % of
Total Assets
SAP Germany 4.7
Unilever Netherlands 4.7
Lonza Group Switzerland 4.2
Fresenius Medical Care Germany 3.9
Compagnie Financière Richemont Switzerland 3.8
ASML Netherlands 3.7
Danske Bank Denmark 3.7
RELX Netherlands 3.6
Industria De Dise Spain 3.6
DSV Denmark 3.5
Commenting on the markets, Stefan Gries, representing the Investment Manager
noted:
During the month, the Company's NAV rose by 1.8% and the share price increased
by 3.9%. For reference, the FTSE World Europe ex UK Index returned 1.5% during
the period.
Over October, resources including oil & gas and basic materials saw strong
returns. Several defensive sectors, which are less geared to the economic
cycle, such as health care and telecoms lagged the market.
The European Central Bank ('ECB') announced an extension to its Quantitative
Easing ('QE') programme to September 2018, although purchases will be cut from
EUR60bn a month to EUR30bn from January 2018. ECB president Mario Draghi stressed
that the move was not a 'taper' but merely a 'downsize' as a degree of monetary
stimulus remained necessary while inflation is below the ECB's target of close
to 2%.
Political risk heightened given that Catalonia declared independence from
Spain, the Italian regions of Lombardy and Veneto voted on greater regional
independence and the Austrian far-right Freedom Party started talks to form a
coalition government.
However, the economic picture remains robust with the European Commission's
monthly eurozone economic sentiment survey rising in October for the fifth
consecutive month to reach its highest level since the start of 2001, showing
almost no impact from the Catalan crisis.
The Company outperformed the reference index over the month. Sector allocation
was the primary driver of returns; stock selection was marginally negative.
On a sector basis the stronger performance came from the lower allocation to
the financials sector, and in particular banks. The sector underperformed
following the ECB's announcement to cut the amount of QE purchases whilst
extending the time frame upon which they will make such purchases. The latter
proved more dovish than the market expected, leading to share price pressure on
the sector.
The higher allocation to technology was also beneficial to returns, whilst the
greater allocation to health care detracted as the sector suffered poor results
releases for the third quarter.
Over the period the poorest performing position was Israeli listed Teva
Pharmaceuticals. A competitor of the company, Mylan, received earlier than
expected approval for their generic version of Copaxone 20 and 40mg, in direct
competition with Teva's largest drug.
Luxury businesses Remy Cointreau and Kering both contributed positively to
performance. Remy reported a 6.2% year-on-year sales growth for the third
quarter beating market expectations. Kering was the Company's top contributing
stock over the month after third quarter results showed a continuation of very
strong operating trends. The Gucci brand recorded organic sales growth of 49%,
significantly above consensus expectations and the company are now guiding to
full year margins of 33%.
Whilst the overweight allocation to health care detracted overall, a position
in Straumann rallied as it reported 16% organic sales growth year-on-year for
the third quarter, raising its full year guidance from low teens to 13-15%.
Stock selection within industrials proved disappointing over October. Finnish
shipbuilding company, Wartsila, saw share price pressure as Q3 results
underwhelmed. We remain confident in holding the stock as it continues to enjoy
strong order intake momentum.
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.
14 November 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.
END
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