BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc All information is at 31 October 2013 and unaudited.
Performance at month end with net income reinvested
One Three One Three Since launch
Month Months Year Years (20 Sep 04) Net asset value (undiluted) 5.0% 3.4% 33.7% 36.0% 194.9% Net asset value (diluted) 4.6% 3.3% 33.1% 36.2% 192.0% Share price 6.7% 8.0% 34.3% 37.8% 188.2% FTSE World Europe ex UK 5.6% 4.9% 32.5% 27.8% 132.3% Sources: BlackRock and DataStream
At month end Net asset value (capital only): 247.71p Net asset value (including income): 247.91p Net asset value (capital only)*: 245.12p Net asset value (including income)*: 245.29p Share price: 241.00p Discount to NAV (including income): 2.8% Discount to NAV (including income)**: 1.7% Subscription share price 30.00p Gearing: 4.3% Net yield: 1.9% Total assets (including income): £281.2m Ordinary shares in issue: 108,719,211** Subscription shares in issue 23,184,318
* Diluted for subscription shares. ** Excluding 5,718,353 shares held in treasury.
Benchmark Sector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%)
Financials 28.5 22.0 France 22.4 Consumer Goods 18.4 13.5 Switzerland 20.6 Health Care 16.1 9.7 Germany 14.8 Consumer Services 13.3 10.9 Netherlands 14.5 Industrials 12.6 13.0 Sweden 5.8 Technology 7.1 10.3 Denmark 5.5 Basic Materials 3.6 5.7 Russia 4.7 Telecommunications 2.7 3.5 Belgium 4.1 Oil & Gas 1.6 8.2 Ireland 3.1 Utilities - 3.2 Spain 2.2 Net current liabilities (3.9) - Finland 1.5
----- ----- Portugal 1.4 100.0 100.0 Hungary 1.2 ===== ===== Poland 1.1 Ukraine 0.8 Italy 0.2
Net current liabilities (3.9)
Ten Largest Equity Investments (in alphabetical order)
Company Bayer Germany Continental Germany ING Netherlands Novo Nordisk Denmark Reed Elsevier Netherlands Roche Switzerland Sanofi France Société Générale France Swiss Re Switzerland Zurich Insurance Switzerland
Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:
During the month the Company's undiluted NAV gained 5.0% and the share price increased by 6.7%. For reference, the FTSE World Europe ex UK Index rose by 5.6% during the same period.
European markets continued to gain during October, signalling further progress in sentiment towards a Eurozone recovery. Greece and Italy both saw double digit gains for the month. There were further signs of improvement in the domestic economy, with the European Central Bank bank lending survey showing a significant improvement in both credit supply and demand and the expectations component pointing to a possible easing of credit conditions for the first time since 2011. Corporate earnings were broadly fine for European equities: at the end of October, 55% of companies had reported a better EPS than expected. At a sector level, financials, telecoms and oil & gas performed best in Europe, with technology and health care lagging behind.
Stock selection was the primary driver of the Company's underwhelming performance during October (although the share price gained by more than the broad market, the NAV did not). Positions in consumer services, technology and telecoms proved the worst performers. The use of gearing again aided returns in another positive month for European equity markets.
Stock selection in consumer services proved the most challenging area for the Company during the month, when compared with the market. A position in Portuguese food retailer Jeronimo Martins fell as the company's net profit for the third quarter came in light versus expectations following sales promotions in a tough competitive environment. A holding in Ryanair continued to see weakness following a difficult September. The Company also suffered from not owning certain 'value recovery' plays in the periphery, including Santander and Telefonica, both of which registered strong gains in a bullish market environment. We have not changed our stance on these companies and do not consider them strong investments over the longer term at present.
On a more positive note, positions in selected banks performed well, including Belgian retail bank KBC, German name Commerzbank and PKO bank in Poland. German auto supplier Continental also performed well and remains as one of the higher conviction positions in the Company, poised to benefit from both cyclical improvements domestically and structural growth in its CO2 reduction and interior safety business.
At the end of the month, the Company had higher weightings (when compared with the broad market index) in consumer services, financials, technology, consumer goods and health care, and lower weightings in basic materials, telecoms, oil & gas, industrials and utilities. At the end of October, the Company was geared by 4.3%.
Outlook We now have clear early indications of economic recovery in Europe with increasing business and consumer confidence, a relatively stable scenario with regard to sovereign debt sustainability in the periphery and a relatively stable political environment ahead of us. Whilst we might see some short term consolidation in the market providing that the overall macro and political picture does not change, we expect equity markets in Europe to continue to progress as cheap valuations, when compared with other asset classes, and investor flows provide strong tailwinds for the market as a whole. It is worth noting that there is risk surrounding this scenario and at this stage the recovery in Europe is only tentative; any significant disappointment would no doubt see a rebasing downwards of expectations by a relatively bullish investor community. The earnings momentum has remained negative this year as a result of a slower recovery and strong FX headwinds. We are cognisant that the FX headwinds from a strong Euro could continue, which may drag on expectations moving into next year. However, notwithstanding some potential short term consolidation after a strong run, we still see a decent upside potential in European equities market over the next 12 months, driven by supportive macro, attractive valuations versus other asset classes and ongoing inflows into the region from the still low levels compared to historic averages.
14 November 2013
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.
-0- Nov/14/2013 16:07 GMT