BlackRock Emerging Europe Portfolio Update
September 20 2017 - 9:44AM
UK Regulatory
TIDMBEEP
BLACKROCK EMERGING EUROPE PLC (LEI - 549300OGTQA24Y3KMI14)
All information is at 31 August 2017 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five *Since
Month Months Year Years Years 30.04.09
Sterling:
Share price 4.7% 3.3% 37.6% 47.1% 47.2% 137.2%
Net asset value 8.5% 8.3% 34.3% 46.3% 42.4% 135.0%
MSCI EM Europe 9.0% 11.5% 31.2% 21.0% 16.6% 82.4%
10/40(NR)
US Dollars:
Share price 2.4% 3.1% 35.3% 14.1% 19.4% 106.3%
Net asset value 6.1% 8.1% 32.1% 13.4% 15.5% 104.4%
MSCI EM Europe 6.5% 11.3% 29.1% -6.1% -5.4% 58.6%
10/40(NR)
Sources: BlackRock, Standard & Poor's Micropal
*BlackRock took over the investment management of the Company with effect from
1 May 2009
At month end
US Dollar:
Net asset value - capital only: 476.20c
Net asset value* - cum income: 488.94c
Sterling:
Net asset value - capital only: 369.58p
Net asset value* - cum income: 379.47p
Share price: 339.25p
Total assets^: GBP136.3m
Discount (share price to cum income NAV): 10.6%
Net cash at month end: 3.6%
Net yield^^^^: 1.7%
Gearing range as a % of Net assets: 0-20%
Issued Capital - Ordinary Shares^^ 35,916,028
Ongoing charges^^^ 1.2%
* Includes year to date net revenue equal to 9.89 pence per share.
^ Total assets include current year revenue.
^^ Excluding 5,000,000 shares held in treasury.
^^^ Calculated as at 31 January 2017, in accordance with AIC guidelines.
^^^^ Yield calculations are based on dividends announced in the last 12 months
as at the date of release of this announcement, and comprise of the final
dividend of 7.50 cents per share, (announced on 28 March 2017, ex-dividend on
18 May 2017)
Sector Gross Country Gross
Analysis assets Analysis assets
(%) (%)
Financials 30.3 Russia 55.6
Energy 30.2 Turkey 18.0
Consumer Staples 8.4 Poland 11.7
Telecommunication Services 8.3 Greece 7.0
Industrials 5.4 Ukraine 4.5
Materials 4.7 Net current assets 3.4
Information Technology 4.3
Real Estate 2.6
Health Care 2.6
Net current assets 3.4
----- -----
100.2 100.2
===== =====
Short positions (1.9) (1.9)
Fifteen Largest Investments
(in % order of Gross Assets as at 31.08.17)
Company Region of Risk Gross assets
(%)
Sberbank Russia 10.2
Gazprom Russia 9.6
Novatek Russia 7.1
Lukoil Russia 5.1
PKO Bank Polski Poland 4.2
Rosneft Oil Company Russia 4.0
Lenta Russia 4.0
National Bank of Greece Greece 3.8
Mobile Telesystems Russia 3.7
Alpha Bank Greece 3.2
Turk Hava Yollari Turkey 3.1
PZU Poland 3.0
TSKB Turkey 3.0
Garanti Bank Turkey 2.9
Turkcell Turkey 2.7
Commenting on the markets, Sam Vecht and Christopher Colunga, representing the
Investment Manager noted:
Market Commentary
The MSCI Emerging Europe 10/40 Index returned +6.5% in August in US Dollar
terms. The Company underperformed the index and returned +6.1% in US Dollar
terms.
All countries in the index posted positive returns. Russia (+8.0%) led the
region as the Ruble strengthened by 3.0% helped by higher oil prices and a
positive 2nd quarter earnings season. On the economic front, flash estimate for
2nd quarter GDP growth at +2.5% was better than consensus estimates: +1.7% and
the 1st quarter: +0.5% (all over the last 12 months). Also, consumer inflation
in July grew by 3.9% over the year and was less than expected, creating room
for the central bank to continue the interest rate cut cycle further and bring
down the cost of borrowing as the economy continues to recover.
Central European countries also performed strongly with Hungary (+7.6%)
leading, followed by Poland (+6.7%) and Czech Republic (+1.8%). The region
benefitted from a strong 2nd quarter earnings season, in particular for the
banks.
Turkey (+4.6%) rose over the month as the Turkish Lira strengthened by 1.9% to
the end of the month. The 2nd quarter earnings season beat expectations,
especially for the large banks. The 12-month current account deficit contracted
to US$ 34.3bn (4.1% of GDP) in June from US$ 35.5bn (4.3% of GDP) in May
primarily due to the 13% contraction in the merchandise trade deficit and the
30% increase in tourism revenues over the year.
After a strong rally in summer, Greece cooled down in August although it ended
the month in positive territory (+1.1%). The 2nd quarter GDP grew +0.5% vs
expectations of 0.2% over the quarter, ESI (Economic Sentiment Indicators) were
up to a two-year high of 99.0 and July PMI (Purchasing Manager Index) rose to
52.2 marking its highest reading since August 2008.
Focus on: Sberbank
Sberbank is Russia's largest bank, state-owned. It has branches throughout the
country and a 46% share in the retail deposit market. The stock performed well
in 2016 amid Russian macro recovery and strong performance post OPEC production
cut agreement, as well as continuing company's restructuring strategy to
improve its services and enhance efficiency.
We have been adding to our position in the stock since March 2017 on the basis
of its strong fundamentals, attractive valuation, low cost of risk and ability
to continue optimising the costs. Furthermore, as the Russian economy and
consumer sector continue to recover and the central bank cuts the key policy
rate, we expect the bank to see increased loan growth, in particular in
mortgages. The stock has seen a pick-up in its price over the last 4 months in
line with its strong 2nd quarter results and the lift in guidance on loans
picking up. The recent strengthening in the Ruble and the interest rate cuts
provided a further support to the bank's NIMs (Net Interest Margins) through
the year end.
20 September 2017
ENDS
Latest information is available by typing www.blackrock.co.uk/beep 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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