Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at31 March 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)	3.7%	11.4%	9.1%	43.6%	367.4%
Net asset value* (diluted)	3.7%	11.4%	9.1%	45.0%	367.8%
Share price	2.7%	11.4%	9.4%	46.1%	349.7%
FTSE World Europe ex UK	2.6%	8.0%	2.6%	36.7%	236.8%

* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
 

At month end

Net asset value (capital only):	357.67p
Net asset value (including income):	358.87p
Net asset value (capital only)1:	357.67p
Net asset value (including income)1:	358.87p
Share price:	342.00p
Discount to NAV (including income):	4.7%
Discount to NAV (including income)1:	4.7%
Net gearing:	2.7%
Net yield2:	1.7%
Total assets (including income):	£305.7m
Ordinary shares in issue3:	85,198,101
Ongoing charges4:	1.09%

1  Diluted for treasury shares.
2  Based on a final dividend of 4.00p per share and an interim dividend of 1.75p per share for the year ended 31 August 2018.
3  Excluding 25,130,837 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	29.0		France	16.8
Health Care	22.2		Switzerland	16.3
Technology	15.9		Germany	12.4
Financials	10.9		Denmark	12.2
Consumer Goods	10.3		Netherlands	9.4
Consumer Services	6.6		Italy	7.6
Basic Materials	4.0		Spain	5.5
Telecommunications	2.0		Sweden	3.9
Net current liabilities	-0.9		United Kingdom	3.8
	-----		Israel	3.6
	100.0		Russia	2.4
			Finland	2.2
			Ireland	2.1
			Belgium	1.8
			Greece	0.9
			Net current liabilities	-0.9
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
Safran	France	6.3
Novo Nordisk	Denmark	6.1
SAP	Germany	5.8
Sika	Switzerland	5.1
Lonza Group	Switzerland	4.3
RELX	United Kingdom	3.7
ASML	Netherlands	3.6
Unilever	Netherlands	3.5
Amadeus IT Group	Spain	3.3
Ferrari	Italy	3.2

Commenting on the markets,Stefan Gries, representing the Investment Manager noted:

During the month, the Company’s NAV rose by 3.7% and the share price rose by 2.7%. For reference, the FTSE World Europe ex UK Index returned 2.6% during the period.

European ex UK markets continued to trend higher in March, with defensive sectors (those less exposed to the economic cycle) outperforming the broader market.  Whilst concerns around global growth persist and have been capitulated by weaker data readings in Europe, particularly the manufacturing Purchasing Manager Index, we see little evidence from companies that a recession is on the horizon. Political volatility continues to influence markets, especially in the UK where the Brexit situation remains in stalemate.

Stock selection was the primary driver of the Company’s outperformance of the reference index over the month. Sector allocation was also additive, with the lower allocation to financials proving beneficial as European bank shares fell over the period. The larger allocation to technology also contributed, whilst the higher allocation to consumer goods detracted.

The health care sector was the largest contributor to relative performance, benefiting from very strong stock selection. The Company’s top performers were Lonza and Novo Nordisk. The latter has experienced incremental positive news on the daily injectable GLP-1 drug Victoza after agreeing patent litigation with competitor Teva. They have also posted three filings with the Food and Drug Administration which the market has taken positively. We believe there is a large opportunity for the oral GLP-1 drug, for which they have used an accelerated filing, both in terms of volume but also, according to the company, for attractive pricing versus other oral drugs.

Within the same sector, avoiding Bayer was also rewarding. Shares sold off after a US jury once again found Bayer’s Monsanto liable for causing cancer. Shares fell on worries over the potential of many similar lawsuits.

The Company also benefited from positions in the technology sector. SAP was amongst the top performers. Whilst SAP is a technology stock, we believe the company has a defensive business model due to its recurring revenue stream. Shares had sold off in late 2018 along with other technology stocks but have recovered year-to-date.

The largest detractor over the month was Bezeq Israeli Telecommunication Company. Shares fell as the company wrote off NIS 1.5 billion due to an impairment in an asset.

A position in multinational information and analytics company RELX was the single largest detractor during March. Shares fell after the University of California cancelled its contract with publishing arm Elsevier. We continue to hold the business, as we believe the capital light business model allows for a high rate of cash flow conversion with repeatable revenues built on subscription models. The business also benefits from the structurally increasing usage of data globally, which supports their data and analysis business.

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 European market is set to face a number of issues this year, not least the impending Brexit date. However, we believe much has been priced into European equity markets, including a greater potential of recession than fundamentals currently point to. We see opportunity for a gentle increase in European growth as we move through the year. This could be driven by fiscal stimulus, abating headwinds and resilience of the consumer. Given the significantly bearish sentiment and positioning towards European equities, we could be nearing the point of maximum pain for the European market allocations, particularly if fundamentals stabilise.

11 April 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.