14 Dec 2016 14:35
BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC - Portfolio UpdateBLACKROCK GREATER EUROPE INVESTMENT TRUST PLC - Portfolio Update
PR Newswire
London, December 14
| BLACKROCK GREATER EUROPE INVESTMENT TRUST plc | ||||||||||||||
| All information is at 30 NOVEMBER 2016 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) | -5.9% | -2.2% | 10.0% | 18.2% | 250.1% | |||||||||
| Net asset value* (diluted) | -5.9% | -2.2% | 10.7% | 19.5% | 250.4% | |||||||||
| Share price | -7.5% | -2.4% | 8.6% | 16.2% | 232.9% | |||||||||
| FTSE World Europe ex UK | -5.6% | -0.4% | 12.1% | 18.8% | 174.1% | |||||||||
| Sources: BlackRock and Datastream | ||||||||||||||
| At month end | ||||||||||||||
| Net asset value (capital only): | 276.91p | |||||||||||||
| Net asset value (including income): | 277.63p | |||||||||||||
| Net asset value (capital only)*: | 276.91p | |||||||||||||
| Net asset value (including income)*: | 277.63p | |||||||||||||
| Share price: | 262.00p | |||||||||||||
| Discount to NAV (including income): | 5.6% | |||||||||||||
| Discount to NAV (including income)*: | 5.6% | |||||||||||||
| Net gearing: | 3.4% | |||||||||||||
| Net yield**: | 2.0% | |||||||||||||
| Total assets (including income): | £288.8m | |||||||||||||
| Ordinary shares in issue***: | 102,003,113 | |||||||||||||
| Ongoing charges****: | 1.07% | |||||||||||||
| * Diluted for treasury shares. ** Based on a final dividend of 3.65p and an interim dividend of 1.65p per share for the year ended 31 August 2016. *** Excluding 8,325,825 shares held in treasury. **** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs, after relief for taxation for the year ended 31 August 2016. | ||||||||||||||
| Sector Analysis | Total Assets | Country Analysis | Total Assets | |||||||||||
| (%) | (%) | |||||||||||||
| Industrials | 27.4 | France | 24.6 | |||||||||||
| Financials | 22.1 | Denmark | 12.2 | |||||||||||
| Consumer Goods | 20.3 | Netherlands | 12.1 | |||||||||||
| Technology | 9.2 | Switzerland | 9.8 | |||||||||||
| Consumer Services | 8.1 | Germany | 7.9 | |||||||||||
| Health Care | 6.3 | Belgium | 7.9 | |||||||||||
| Basic Materials | 5.3 | Ireland | 5.8 | |||||||||||
| Telecommunications | 2.7 | Sweden | 5.2 | |||||||||||
| Net current liabilities | (1.4) | Finland | 3.9 | |||||||||||
| ----- | Russia | 3.2 | ||||||||||||
| 100.0 | Luxembourg | 2.4 | ||||||||||||
| ===== | Turkey | 1.9 | ||||||||||||
| Ukraine | 1.6 | |||||||||||||
| Italy | 1.5 | |||||||||||||
| Poland | 1.4 | |||||||||||||
| Net current liabilities | (1.4) | |||||||||||||
| ----- | ||||||||||||||
| 100.0 | ||||||||||||||
| ===== | ||||||||||||||
| Ten Largest Equity Investments | ||||||||||||||
| % of | ||||||||||||||
| Company | Country | Total Assets | ||||||||||||
| AXA | France | 4.1 | ||||||||||||
| Anheuser-Busch Inbev | Belgium | 3.3 | ||||||||||||
| RELX | Netherlands | 3.3 | ||||||||||||
| Pandora | Denmark | 3.0 | ||||||||||||
| Bayer | Germany | 2.9 | ||||||||||||
| KBC Groep | Belgium | 2.7 | ||||||||||||
| Vinci | France | 2.7 | ||||||||||||
| KPN | Netherlands | 2.7 | ||||||||||||
| Thales | France | 2.7 | ||||||||||||
| Schneider Electric | France | 2.7 | ||||||||||||
| Commenting on the markets, Vincent Devlin, representing the Investment Manager noted: | ||||||||||||||
| During the month, the Company’s NAV fell by 5.9% and the share price decreased by 7.5%. For reference, the FTSE World Europe ex UK Index was down 5.6% during the period. | ||||||||||||||
| The reference index fell sharply in November, largely as a result of Euro weakness relative to Sterling. In Euro terms, the benchmark was relatively flat. The surprise victory for Trump in the US Presidential election had a broad impact on the market over the month, with many investors moving into ‘Trump Trades’. Generally, these are companies which are regarded to benefit from a reflationary environment and Trump’s policies, which will promote fiscal spending and a cut in US corporate tax rates. | ||||||||||||||
| In this environment, as sovereign bond yields in both the US and Europe moved higher, financials performed well. The underweight allocation of the Company to the financial sector detracted from performance. Conversely, however, the underweight allocation to utilities, which sold off given their ‘bond proxy’ characteristics, proved positive for relative returns. European macro releases were cautiously positive. The European manufacturing Purchasing Manager’s Index moved slightly up while a German business confidence survey remained unchanged from last month. However, political risks remained over the period, particularly ahead of the Italian referendum as well as the presidential elections in Austria. | ||||||||||||||
| Stock selection impacted negatively on performance, with the consumer sector proving most challenged. In particular, we saw emerging market exposed names, such as Steinhoff, sell off sharply as sentiment turned less positive on emerging markets in light of recent dollar strength and potential shift of US policy. Equally, as sovereign bond yields rose in response to Trump’s reflationary policies, yield sensitive stocks such as KPN lagged the market. | ||||||||||||||
| On the other side of the coin, positions exposed positively to US revenues, and in particular within infrastructure and defence, performed well – such as CRH and Thales. The spike in the oil price following OPEC’s meeting in which they announced the first cut to production since the Global Financial Crisis, was beneficial for shale exposed holding Tenaris, which was the top contributor to performance over the month. | ||||||||||||||
| The Company also saw stronger performance from Russian listed Mail RU Group and Sberbank, as the Russian market proved more resilient in light of both more supportive oil prices and improving economic data. | ||||||||||||||
| At the end of the period, the Company had higher weightings when compared with the reference index to industrials, technology, consumer services, consumer goods and financials. The Company had a lower weighting towards oil & gas, utilities, health care, basic materials and telecoms. | ||||||||||||||
| Outlook | ||||||||||||||
| The outlook for the global economy on balance has likely improved, with leading indicators suggesting more positive signals across regions. The unexpected election victory of Donald Trump – leading to expectations for large tax cuts, increased infrastructure spending and reduced regulation – has likely amplified reflationary expectations and could help support the economic cycle further. Parts of the emerging markets are also showing signs of recovery following recession; this could continue in spite of the strengthening dollar. It is also important to be mindful that central banks are heading towards divergent paths. This calls for a more nuanced assessment of stocks and sectors that could look attractive in these conditions. | ||||||||||||||
| On the earnings front, the European market is seeing a more supportive earnings revision trend and margins are now beginning to improve. Finally, with the Fed rate cycle likely to be on a firmer upward trend than previously expected, we have had a major adjustment in the fixed income market, which could persist for some time, and this has significant implications regarding equities’ style leadership. We believe that markets are likely to remain volatile in this context. Therefore, we need to continue to focus our efforts on finding undervalued pockets of stocks and industries. | ||||||||||||||
| 14 December 2016 | ||||||||||||||
| 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. | ||||||||||||||
BlackRock Greater Europe Investment Trust (BRGE)