Portfolio Update
17 December 2010 - 3:15AM
UK Regulatory
TIDMEST TIDMESTS
THE EASTERN EUROPEAN TRUST PLC
All information is at 30 NOVEMBER 2010 and unaudited.
Performance at month end with net income reinvested
One Three One Three *Since
Month Months Year Years 30.04.09
Sterling:
Share price** -4.1% 11.2% 36.5% -17.4% 100.6%
Net asset value** -1.2% 10.7% 31.3% -21.2% 95.9%
MSCI EM Europe 10/40(TR) -2.5% 8.5% 20.1% -5.5% 74.1%
US Dollars:
Net asset value -3.8% 12.2% 24.6% -40.3% 105.9%
MSCI EM Europe 10/40(TR) -5.0% 10.0% 14.0% -28.4% 82.9%
Sources: BlackRock and Standard & Poor's Micropal
* BlackRock took over the investment management of the Company with effect from
1 May 2009.
** Net asset value and share price performance includes the subscription share
reinvestment, assuming the subscription share entitlement was sold and the
proceeds reinvested on the first day of trading.
At month end
Net asset value - capital only: 322.36p
Net asset value*** - cum income: 324.04p
Share price: 294.50p
Subscription share price: 19.25p
Total assets^: GBP167.2m
Discount (share price to capital only NAV): 8.6%
Gearing: 3.8%
Net yield: n/a
Ordinary shares in issue^^: 49,626,886
Subscription shares: 9,201,084
***Includes year to date net revenue equal to 1.68p per share.
^Total assets include current year revenue.
^^Excluding 4,664,367 shares held in treasury.
Benchmark
Sector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%)
Financials 35.5 32.4 Russia 59.0
Energy 23.6 31.7 Turkey 15.9
Materials 14.0 12.3 Poland 12.1
Telecommunications 7.5 8.5 Czech Republic 4.6
Consumer Staples 7.2 4.4 Hungary 3.1
Utilities 4.9 6.8 Austria 1.7
Industrials 3.9 2.0 Kazakhstan 1.4
Consumer Discretionary 3.4 0.8 Germany 1.2
Health Care 1.0 0.8 Ukraine 1.0
Technology - 0.3 Sweden 1.0
Net current liabilities (1.0) 0.0 Net current liabilities (1.0)
----- ----- -----
100.0 100.0 100.0
===== ===== =====
Ten Largest Equity Investments(in alphabetical order)
Company Country of Risk
Bank Pekao Poland
Gazprom Russia
MMC Norilsk Nickel Russia
Lukoil Russia
Novatek Russia
Rosneft Russia
Sberbank Russia
Surgutneftegaz Russia
Turkiye Garanti Turkey
Vimpel Communications Russia
Commenting on the markets, Sam Vecht, representing the investment
Manager noted;
Market
The MSCI Emerging Europe 10/40 Index returned -2.5 % in November. The region's
markets fell on fears that the financial crises in Ireland and Portugal could
spread beyond the borders of the Eurozone. Hungary was the worst performer over
the month. Investors reacted to the effective nationalisation of the domestic
pension industry, fearing that contributions will be diverted from the equity
market to finance government spending. The telecommunications sector performed
poorly as did consumer stocks. The materials sector performed well as commodity
prices rose following the commencement of a quantitative easing programme in
the United States.
Performance
The Company's NAV fell by 1.2%, outperforming the index by 1.3%. Both country
allocation and stock selection contributed to performance. The overweight
position in Russia, which outperformed in November, was a positive contributor
as was the underweight position in the underperforming central European
markets, Poland and Hungary. Stocks contributing to performance this month
included Turkish fertiliser company, Gubre Fabrikalari after the company
announced better than expected earnings. Also contributing to performance was
Russian mobile telecommunications firm, Vimpelcom. Despite concerns surrounding
the risks associated with the acquisition of assets from Weather Investments,
expectations of strong earnings results drove stock price performance. Also
contributing to performance was Russian railway company, TransContainer, which
performed well after an initial public offering ("IPO"), the first of a
multi-year privatisation programme of 900 Russian state-owned enterprises.
Detracting from performance were underweight positions in Russian energy
company, Lukoil, and Russian gold miner, Polyus Gold, which performed well as
commodity prices benefitted from the US quantitative easing programme.
Activity
In November the Company added to positions in Russia by participating in the
IPOs of railway company, TransContainer, and infrastructure company,
Mostotrest, reflecting our positive views of the companies' earnings growth
potential at attractive valuations. We also added to the position in Russian
financial, Sberbank, which we believe to be an undervalued beneficiary of the
Russian economic recovery and will also be aided by the announcement that
management has set a date for a depositary receipt programme. The team took
some profits in Turkish stocks after strong recent performance, including
industrial company, Gubre Fabrikalari, telecommunication firm, Turkcell and
financial, Turkiye Halk Bankasi. Finally we sold the position in Russian
internet company, mail.ru, after the stock rose by nearly 30% following an IPO.
Outlook
Emerging European equities remain very attractive on low valuations compared to
other markets. Corporate earnings growth is strong and there have been further
upgrades to forecasts for both 2010 and 2011.
Portfolio positions in energy remain the largest underweighting, while the
portfolio is overweight the materials sector. The increase in materials
reflects our positive view of the economic outlook which is further supported
by additional US quantitative easing; we believe that companies in the
materials sector are well-placed to take advantage of the weaker dollar and
rising commodity prices. Stock specific factors lead us to be more cautious on
energy companies. In Hungary, we are concerned about the impact of changes to
the pension fund industry while in Russia, we believe the winning of the FIFA
2018 World Cup bid to be positive for the market. In terms of country
allocations, we have increased the weighting in Russia, while the portfolio
remains underweight Poland where we are concerned about the impact of the
funding requirements of government privatisations on the market.
Latest information is available by typing www.blackrock.co.uk/its on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV
terminal).
16 December 2010
END
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