BLACKROCK GREATER EUROPE
INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 31 December
2018 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) |
-5.8% |
-14.2% |
-5.6% |
29.5% |
319.6% |
Net asset value*
(diluted) |
-5.8% |
-14.2% |
-5.6% |
30.7% |
320.0% |
Share price |
-5.7% |
-13.3% |
-7.6% |
25.1% |
303.6% |
FTSE World Europe ex
UK |
-4.6% |
-10.9% |
-9.5% |
27.4% |
211.9% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value
(capital only): |
321.78p |
Net asset value
(including income): |
322.20p |
Net asset value
(capital only)1: |
321.78p |
Net asset value
(including income)1: |
322.20p |
Share price: |
307.00p |
Discount to NAV
(including income): |
4.7% |
Discount to NAV
(including income)1: |
4.7% |
Net cash: |
3.0% |
Net
yield2: |
1.9% |
Total assets
(including income): |
£275.1m |
Ordinary shares in
issue3: |
85,373,101 |
Ongoing
charges4: |
1.09% |
1 Diluted for treasury shares.
2 Based on a final dividend of 4.00p per share and an interim
dividend of 1.75p per share for the year ended 31 August 2018.
3 Excluding 24,955,837 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 2018.
Sector
Analysis |
Total
Assets
(%) |
|
Country
Analysis |
Total
Assets
(%) |
Industrials |
29.7 |
|
Switzerland |
18.2 |
Health Care |
23.6 |
|
France |
15.7 |
Technology |
11.8 |
|
Germany |
11.9 |
Financials |
11.6 |
|
Denmark |
11.7 |
Consumer Goods |
9.8 |
|
Netherlands |
8.7 |
Consumer Services |
5.2 |
|
Italy |
6.0 |
Basic Materials |
3.5 |
|
United Kingdom |
4.2 |
Telecommunications |
1.8 |
|
Sweden |
3.8 |
Net Current
Assets |
3.0 |
|
Israel |
3.5 |
|
----- |
|
Russia |
3.1 |
|
100.0 |
|
Finland |
2.5 |
|
|
|
Ireland |
2.4 |
|
|
|
Spain |
2.4 |
|
|
|
Belgium |
1.9 |
|
|
|
Greece |
1.0 |
|
|
|
Net Current
Assets |
3.0 |
|
|
|
|
----- |
|
|
|
|
100.0 |
|
|
|
|
===== |
Ten Largest Equity
Investments |
|
|
Company |
Country |
%
of
Total Assets |
Safran |
France |
6.8 |
Lonza Group |
Switzerland |
6.7 |
Novo Nordisk |
Denmark |
6.2 |
SAP |
Germany |
5.8 |
Sika |
Switzerland |
4.9 |
RELX |
United Kingdom |
4.2 |
Unilever |
Netherlands |
3.8 |
Thales |
France |
3.3 |
Sberbank |
Russia |
3.1 |
ASML |
Netherlands |
3.1 |
Commenting on the markets,
Stefan Gries, representing the
Investment Manager noted:
During the month, the Company’s NAV and share price fell by 5.8%
and 5.7% respectively. For reference, the FTSE World Europe ex UK
Index returned -4.6% during the period.
European ex UK markets fell sharply in December as concerns
around global growth and political agendas plagued the market.
Across the market index, all sectors produced a negative
performance except utilities which was buoyed by capital flow into
perceived defensive assets, those with less exposure to the
economic cycle.
The Eurozone December flash Purchasing Manager Index was lower
than expected, partially dragged down by the collapse in industrial
production in Germany as a result
of poor auto production in recent months due to emissions
regulations. Political tension in France, and indeed globally from the continued
trade war rhetoric, weighed on both business and consumer
confidence.
Whilst inflation remains at bay, The European Central Bank
confirmed to end its net asset purchases in December, and clarified
that it will continue with reinvestments until at least after its
first interest rate hike.
Stock selection was the main driver of the Company’s
underperformance over the month versus the reference index. Sector
allocation was broadly neutral. Whilst the lower allocation to the
utilities sector was a drag on returns, the Company’s lower
weighting towards financials was beneficial.
The largest detractor over the month was a position in Lonza,
which fell sharply ahead of its 2019 guidance due at the end of
January. Investors appear nervous that there will be a repeat of
last year’s experience in which guidance disappointed and the
shares sold off aggressively. At the same time, new accounting
methodology and the disposal of its Water Care business are both
leading to further uncertainty. We were conscious of the potential
for small downgrades going into the event, but believe the
long-term structural growth of the company remains robust.
The Company also experienced a loss in health care position
Fresenius Medical Care. The company released an ad hoc guidance
update for 2019 which was viewed negatively by the market. While
there are many moving parts, we believe the long-term investment
case is intact and see good value in the shares at this price.
A number of other positions which are mid-cap and exhibit a
richer valuation, but do offer, we believe, strong potential growth
in earnings, also suffered underperformance. This included
positions in Ferrari and LVMH.
Positively, a holding in Novo Nordisk aided returns as trials
for cardiovascular outcomes on their oral semaglutide drug were
favourable. This should allow the company to apply to the Food and
Drug Administration for a cardiovascular label for their existing
injectable drug, which could prove a boost to sales in the
future.
At the end of the period, the Company had a higher allocation
than the reference index towards industrials, technology, consumer
services and health care. A lower allocation was held in
financials, consumer goods, utilities, telecommunications, basic
materials and oil & gas.
Outlook
The range of potential economic outcomes is widening. Whilst
stimulus has helped to push US growth ahead, pockets of slower
growth are appearing across regions and industries. Overall, as
with the onset of this year, we think global growth will become
more moderate, but do not yet believe we are moving towards a
recessionary environment, either in Europe or globally. In saying this, we are
increasingly sceptical of the situation in Italy and believe there is greater downside
risk emanating from this region. Increased risks of contagion may
dampen our view on European fundamentals. At present, however, we
continue to see a relatively robust environment for the consumer,
who is enjoying wage increases but a low level of inflation, as
well as strength in certain industries such as construction, where
order books are improving. Following the market re-set, valuation
risk also appears less extended and intra-market positioning less
extreme. As the economic situation unfolds in the global arena and
fixed income markets potentially stabilise, there may be
opportunities to add to attractively valued companies which are
exhibiting strong earnings power. In the near-term, we have moved
our portfolio to be more defensive at the margin acknowledging
potential risks on the horizon.
16 January 2019
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.