| 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. |