BLACKROCK GREATER EUROPE
INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 30 September
2019 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) |
0.0% |
-0.2% |
6.9% |
43.8% |
422.7% |
Net asset value*
(diluted) |
0.0% |
-0.2% |
6.9% |
43.8% |
423.1% |
Share price |
-0.5% |
0.5% |
8.7% |
45.7% |
406.1% |
FTSE World Europe ex
UK |
1.0% |
1.6% |
6.3% |
33.1% |
272.3% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value
(capital only): |
396.07p |
Net asset value
(including income): |
399.37p |
Net asset value
(capital only)1: |
396.07p |
Net asset value
(including income)1: |
399.37p |
Share price: |
383.00p |
Discount to NAV
(including income): |
4.1% |
Discount to NAV
(including income)1: |
4.1% |
Net gearing: |
1.4% |
Net
yield2: |
1.5% |
Total assets
(including income): |
£337.5m |
Ordinary shares in
issue3: |
84,518,101 |
Ongoing
charges4: |
1.09% |
1 Diluted for treasury shares.
2 Based on a final dividend of 4.00p per share for the year
ended 31 August 2018 and an interim dividend of 1.75p for the
year ending 31 August 2019.
3 Excluding 25,810,837 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 |
26.4 |
|
Denmark |
16.8 |
Health Care |
20.2 |
|
France |
16.5 |
Technology |
17.3 |
|
Germany |
14.5 |
Consumer Goods |
16.8 |
|
Switzerland |
14.5 |
Financials |
8.9 |
|
Italy |
7.9 |
Consumer Services |
6.1 |
|
Netherlands |
6.7 |
Basic Materials |
3.2 |
|
Spain |
5.1 |
Telecommunications |
1.6 |
|
Sweden |
5.0 |
Net current
liabilities |
-0.5 |
|
United Kingdom |
4.5 |
|
----- |
|
Israel |
2.7 |
|
100.0 |
|
Poland |
2.0 |
|
===== |
|
Ireland |
1.8 |
|
|
|
Belgium |
1.6 |
|
|
|
Greece |
0.9 |
|
|
|
Net current
liabilities |
-0.5 |
|
|
|
|
----- |
|
|
|
|
100.0 |
|
|
|
|
===== |
Ten Largest Equity
Investments |
|
|
Company |
Country |
%
of
Total Assets |
Safran |
France |
7.1 |
Novo Nordisk |
Denmark |
6.4 |
Adidas |
Germany |
6.1 |
SAP |
Germany |
5.7 |
Sika |
Switzerland |
5.2 |
Royal Unibrew |
Denmark |
4.8 |
Lonza Group |
Switzerland |
4.5 |
ASML |
Netherlands |
4.5 |
DSV |
Denmark |
4.5 |
RELX |
United Kingdom |
4.5 |
Commenting on the markets,
Stefan Gries, representing the
Investment Manager noted:
During the month, the Company’s NAV was flat, returning 0% and
the share price fell by 0.5%. For reference, the FTSE World Europe
Ex UK Index returned +1.0% during the period.
The market experienced a reversal over the month, where stocks
that had been performing well began to underperform those out of
favour stocks. This reversal proved wide spread and based on market
positioning, with many of those less well owned names in the market
rerating without fundamental grounding. This market unwind came
from an extreme position at the end of August, following one of the
sharpest downward moves in government bond yields in a single month
on record.
Economic data provided further evidence that trade disputes and
broader geopolitical tensions continue to weigh on the global
economy.
During the month, the European Central Bank (ECB) announced a
broad package of easing measures including cutting the deposit rate
by 10 basis points to -50 basis points, as well as restarting asset
purchases at a pace of €20bn Euro per month, with a commitment to
run the programme until its inflation target was met.
The Company underperformed the index over the month with both
stock selection and sector allocation detracting from returns. The
financials sector was the largest detractor to returns during
September, as the sector saw the strongest returns in the index.
Our selected position in KBC was positive; however, the overall
underweight to the sector was negative for performance. We continue
to hold our underweight position, as we believe banks remain
structurally challenged given low interest rates and an oversupply
in the sector. There was no part of the ECB statement which we
believe alters this outlook.
A lower allocation to the oil & gas sector also detracted
due to the rising oil price following the attacks on Saudi oil
fields, though we note this has already reversed in full going into
October.
The Company’s allocation to luxury goods proved challenging over
the quarter as tariff fears and ongoing protests in Hong Kong weighed on the share prices.
This included a position in LVMH, which detracted given the group’s
mid single-digit sales exposure to Hong
Kong. While we appreciate third quarter earnings might be
slightly weaker than Q2, we still expect robust numbers and believe
sales in mainland China and the US
can partially offset weakness from Hong
Kong.
For Rémy Cointreau, the same narrative proved challenging for
the shares. However, the most recent data for August, had shown
strength in the Asian and North American markets in demand for
Cognac. We believe the group remains well positioned to flex their
production and push up pricing in response to any potential tariff
action from the US.
A holding in Safran was the top performer during the month after
having reported impressive numbers across all divisions and raising
growth forecasts for the rest of the year. The civil aftermarket
continues to be strong, growing 10% in the first half of the year.
Company management also confirmed that the LEAP engine roll-out is
progressing well and that the turnaround of Zodiac, acquired in
early 2018, is on track.
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 global economic environment is clearly deteriorating in
response to the uncertainty caused by US-Chinese relations. We
believe this has created disruption within supply chains and
potential delays to capital expenditure, but do not see structural
imbalances in the economy at this point in time. Policy remains
supportive in Europe and the
consumer resilient with Eurozone retail sales growing 2.6%
year-on-year in June. Q2 earnings releases have unveiled a slowdown
in short-cycle companies, however our portfolios are generally not
exposed to these types of businesses. At present, we do not see
contagion beyond this. Valuation dispersion within the market
remains a topic of conversation, but we believe the prevailing
environment and structural headwinds warrant ‘cheap valuations’ for
some sectors. Our portfolio capital is positioned to where we see
the best upside driven by fundamentals. Whilst markets can respond
to statistical indicators in the near term, at times causing
rotations, we believe company fundamentals drive long-term
performance. We continue to have a small pro-cyclical tilt in
portfolios, primarily expressed through late cycle industrials,
such as aerospace stocks, and consumer exposed names, such as
luxuries.
14 October 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.