BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc
All information is at 31 December 2015 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) 1.9% 7.9% 14.5% 38.4% 224.1%
Net asset value* (diluted) 1.5% 6.9% 13.5% 37.2% 221.5%
Share price 5.3% 11.2% 16.4% 42.4% 222.7%
FTSE World Europe ex UK 0.2% 6.1% 5.3% 32.1% 144.9%
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): 262.06p
Net asset value (including income): 261.99p
Net asset value (capital only)*: 259.68p
Net asset value (including income)*: 259.63p
Share price: 259.00p
Discount to NAV (including income): 1.1%
Discount to NAV (including income)*: 0.2%
Subscription share price: 11.50p
Net gearing: 3.4%
Net yield**: 1.9%
Total assets (including income): £276.0m
Ordinary shares in issue***: 103,075,838
Subscription shares: 20,542,076
Ongoing charges****: 0.89%
* Diluted for subscription shares and treasury shares.
** Based on a final dividend of 3.35p and an interim dividend of 1.65p per
share for the year ended 31 August 2015.
*** Excluding 6,725,825 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 2015.
Sector Analysis Total Assets Country Analysis Total Assets
(%) (%)
Financials 29.6 France 17.6
Industrials 18.7 Switzerland 15.7
Health Care 16.7 Germany 13.7
Consumer Goods 12.1 Italy 8.2
Technology 8.1 Netherlands 8.1
Consumer Services 6.8 Denmark 8.1
Telecommunications 4.0 Sweden 7.9
Basic Materials 3.6 Ireland 7.5
Oil & Gas 1.6 Finland 4.8
Net current liabilities (1.2) Belgium 2.8
----- Turkey 2.2
100.0 Spain 1.6
===== Russia 1.5
Poland 1.5
Net current liabilities (1.2)
-----
100.0
=====
Ten Largest Equity Investments
% of
Company Country Total Assets
Novo Nordisk Denmark 5.1
Novartis Switzerland 4.8
Bayer Germany 3.6
AXA France 2.9
Ryanair Ireland 2.8
Heineken Netherlands 2.7
Deutsche Telekom Germany 2.6
Sampo Oyj Finland 2.5
RELX Netherlands 2.5
Capgemini France 2.5
Commenting on the markets, Vincent Devlin, representing the Investment Manager
noted:
During the month, the Company's NAV rose 1.9% and the share price increased by
5.3%. For reference, the FTSE World Europe ex UK Index was up 0.2% during the
period.
Europe ex UK equity markets were flat in December (GBP terms), bringing returns
for 2015 to 5.1%. The weak Euro slightly muted the strength of returns in the
market in Sterling terms. As with much of the quarter, focus in December was
on global central bank actions. After some mixed macro data and lower
inflation, the European Central Bank (ECB) announced the second phase of
quantitative easing at the start of December, with the US Federal Reserve
raising interest rates for the first time in nearly 10 years in mid-December.
Market expectations of the scale of the ECB action were not quite met - while
the extension of the timeframe was welcomed, the lack of increase in the
monthly programme size disappointed. While the short term market reaction was
negative, Draghi has effectively reinforced the longer term commitment to
underwrite nominal economic growth in the Eurozone and this remains a positive
environment for European corporate earnings to grow.
Stock selection drove the Company's performance when compared with the
reference index during December, whilst the contribution from sector allocation
was also marginally additive. The gains incurred on a sector basis were
primarily driven by the Company's lower weight to basic materials. The sector
continues to feel pressure from slower global growth, particularly from China,
and falling commodity prices. Likewise, the Company's lower exposure to oil &
gas provided a positive contribution to returns. The Company's greater
exposure to industrials, when compared with the reference index, hampered
performance on a relative sector basis; however, this was far outweighed by
strong stock specific returns in this industry.
The Company's largest contributor over the month was Irish airline Ryanair
which reported a continued strength in traffic. Within this, the load factors,
which indicate the amount of a flight's capacity filled, have increased
year-on-year. Reported total passengers continues to far exceed that of its
peers. The Company also benefited from a holding in Novo Nordisk. Q3 results
provided comfort to investors, as did the guidance given for 2016.
Within industrials, Dassault Aviation also performed strongly. The stock
bounced back from oversold levels following upgrades. The news of the receipt
of Qatar's down payment for the 24 Rafale aircraft ordered was also well
received by the market.
The largest detractor over the month was Electrolux. During the month, a
potentially accretive deal to buy GE's Appliance business fell through. The
resulting break fee of US$175m and reduced M&A potential weighed heavily on the
share price. Despite a strong competitive position, Sberbank also
underperformed as the Ruble and Russian equities sold-off in response to a
lower oil price.
At the end of the period, the Company had higher weightings when compared with
the reference index to financials, technology, consumer services, industrials
and health care. The Company had lower exposure to consumer goods, basic
materials, oil & gas, utilities and telecoms.
Outlook
Despite the uncertain macroeconomic outlook in 2016 across different regions,
we remain constructive on European equities which have a more supportive
environment in the face of diverging monetary policy cycles between the US and
Europe. The incremental support from the ECB through expansion of the current
QE programme will, in our view, have a further positive impact on European GDP
growth and the credit cycle. However, one question mark remains over earnings
growth in 2016 which we forecast to be mid-to-high single digit level, still
impacted by both energy and materials sectors, and weak capital expenditure
trends, but benefiting from the Euro weakness. In our view, a weak Euro,
subdued wage growth, expanding domestic credit and some additional profit
margin normalisation should all support corporate earnings in 2016 in
Continental Europe, whilst the UK is likely to face more headwinds on this
front. The main risk to this scenario comes from a bigger than expected
slowdown in the US and China. The tightening of US interest rates provides a
headwind to USD global liquidity and the implications of this need to be
closely monitored. In this context, individual stock selection remains
critical.
13 January 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 Euro Inv Tst : EUROPE INVESTMENT TRUST PLC - Portfolio Update
January 13, 2016 at 12:12 pm
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