BlackRock Grtr Eur Portfolio Update
12 January 2018 - 3:49AM
UK Regulatory
TIDMBRGE
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 31 December 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% 1.5% 19.7% 57.1% 344.6%
Net asset value* (diluted) 1.9% 1.5% 19.7% 57.1% 345.0%
Share price 0.1% 4.1% 23.0% 57.5% 336.7%
FTSE World Europe ex UK 0.5% 0.4% 17.5% 48.2% 244.5%
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): 346.20p
Net asset value (including income): 347.06p
Net asset value (capital only)1: 346.20p
Net asset value (including income)1: 347.06p
Share price: 338.00p
Discount to NAV (including income): 2.6%
Discount to NAV (including income)1: 2.1%
Net cash: 0.1%
Net yield2: 1.6%
Total assets (including income): GBP308.2m
Ordinary shares in issue3: 88,801,863
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 21,527,075 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 30.5 France 17.1
Health Care 18.2 Switzerland 15.9
Consumer Goods 15.6 Netherlands 13.2
Consumer Services 13.2 Denmark 12.8
Technology 8.0 Germany 12.6
Financials 8.0 Sweden 7.6
Oil & Gas 4.1 Belgium 6.0
Basic Materials 2.3 Russia 4.1
Net current assets 0.1 Spain 3.5
----- Finland 3.4
100.0 Israel 1.7
===== Greece 1.5
Ukraine 0.5
Net current assets 0.1
-----
100.0
=====
Ten Largest Equity Investments
Company Country % of
Total Assets
SAP Germany 4.7
Unilever Netherlands 4.6
Fresenius Medical Care Germany 4.4
Lonza Group Switzerland 4.1
RELX Netherlands 4.0
Novo Nordisk Denmark 3.9
Compagnie Financière Richemont Switzerland 3.7
Danske Bank Denmark 3.7
Industria De Diseno Textil Inditex Spain 3.5
DSV Denmark 3.4
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 rose by
0.1%. For reference, the FTSE World Europe ex UK Index returned 0.5% during the
period.
The Eurozone economy continued its upward trajectory with industrial
production, employment and the flash purchasing managers' indexes (PMI) all
coming in strong. The European Central Bank (ECB) left interest rates and its
Quantitative Easing programme unchanged. The Bank confirmed that between
January and September 2018 it will halve its monthly bond purchases to EUR30bn
and will reinvest the proceeds of any bonds that mature.
Looking at the political landscape, in Catalonia regional elections saw
separatist parties gain 48% of the vote and claim 70 seats out of 135 - just
ahead of the 68-seat threshold required to form a government. However, as the
three pro-independence parties did not join forces during the campaign and
would now have to agree on a common leadership and political agenda, forming a
government could be difficult. In Italy, President Sergio Mattarella dissolved
parliament on 28 December and announced a general election to be held on 4
March.
The Company outperformed the market over the month. Stock selection was a
strong driver of returns, whilst sector allocation was neutral.
On a sector basis, the lower allocations to both the basic materials and
financials sectors, compared with the reference index, detracted from
performance. With regards to the former, the sector benefited from a firming of
commodity prices into the year-end. Positively, the lower allocation to the
utilities sector aided returns, as it suffered losses through the month
following strong performance in November.
A position in Israeli pharmaceutical company, Teva, proved the top performing
stock over the month as the share price saw some relief following a period of
underperformance. Elsewhere in health care, a position in Fresenius Medical
Care also aided returns. The company has seen good progress in its value-based
care cost saving programme, with an increasing number of patients enrolled. The
share price was supported by the announcement of a buyback programme, as well
as by proposals for US tax reform, with over 70% of its revenues coming from
the US.
The Company also saw positive performance from a holding in Thales, which made
an acquisition in December to support its digital business. There is an
expectation for the deal to close in H2 2018 and deliver substantial revenue
and cost synergies as Thales combines their Big Data and AI operations with the
new Gemalto unit.
A holding in Adidas detracted from returns. We had reduced the size of the
position in November as we felt the stock would face some headwinds into the
year-end, including the exceptionally promotional environment and a move of
investor focus on to FY18 guidance which we felt would be conservative. We
believe the investment case looks robust in the longer term and the group can
continue a strong growth trajectory.
Outlook
The Euro area recovery appears broad and sustainable. The pillars of demand are
in place to allow a continuation of growth above the recent historic average.
The economy looks at little risk of over-heating in the near term, as slack
continues to exist. Despite falling unemployment and increasing consumer
confidence driving higher demand, Euro area core inflation remains sluggish and
continues to undershoot the ECB's target levels. Monetary policy is therefore
likely to remain accommodative and any withdrawal of liquidity will be slow and
done with caution. The robustness of the economy, and relatively quiet
political environment, is allowing for growth in earnings and corporate
investment.
The caution borne by corporates in the Euro area in the wake of both the
financial crisis and Euro crisis has left them in a healthy financial
situation. Alongside continued favourable financing conditions, this is
providing opportunities for re-leveraging and M&A activity, which could further
support earnings in the region. The expected easing of the currency headwind
facing many European corporates going into the first half of 2018 is also
supportive in this regard. Whilst the market overall is trading around its
historical average range, we believe a selective approach can help identify
attractively valued investment opportunities in a market where strategic
decision making and corporate investment is creating increasing disparity
between winners and losers.
11 January 2018
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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