Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at28 February 2018 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)	-2.1%	1.5%	17.1%	44.0%	343.4%
Net asset value* (diluted)	-2.1%	1.6%	17.1%	44.5%	343.8%
Share price	-2.4%	-2.6%	17.6%	46.1%	325.1%
FTSE World Europe ex UK	-2.7%	-0.9%	12.7%	36.0%	239.5%

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

At month end

Net asset value (capital only):	345.00p
Net asset value (including income):	346.16p
Net asset value (capital only)1:	345.00p
Net asset value (including income)1:	346.16p
Share price:	329.00p
Discount to NAV (including income):	4.6%
Discount to NAV (including income)1:	5.0%
Net gearing:	5.0%
Net yield2:	1.7%
Total assets (including income):	£307.4m
Ordinary shares in issue3:	88,801,863
Ongoing charges4:	1.10%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.70p per share and an interim dividend of 1.75p per share for the year ended 31 August 2017.
3  Excluding 21,527,075 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 2017.
 

Sector Analysis	Total  Assets  (%)		Country Analysis	Total  Assets  (%)
Industrials	33.1		Switzerland	17.3
Health Care	16.5		France	16.3
Consumer Goods	12.9		Germany	14.0
Consumer Services	10.3		Denmark	12.1
Financials	10.3		Netherlands	11.8
Technology	8.9		Sweden	8.5
Basic Materials	3.7		Belgium	5.4
Oil & Gas	3.4		Finland	3.6
Utilities	1.1		Russia	3.4
Net current liabilities	(0.2)		Spain	3.1
	-----		Israel	2.0
	100.0		Greece	1.6
	=====		Turkey	1.1
			Net current liabilities	(0.2)
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
Unilever	Netherlands	4.3
Safran	France	4.3
Lonza Group	Switzerland	4.2
Fresenius Medical Care	Germany	4.1
Danske Bank	Denmark	4.0
Wartsila	Finland	3.6
Novo Nordisk	Denmark	3.5
Compagnie Financière Richemont	Switzerland	3.4
SAP	Germany	3.3
Adidas	Germany	3.2

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

During the month, the Company’s NAV fell by 2.1% and the share price decreased by 2.4%. For reference, the FTSE World Europe ex UK Index returned -2.7% during the period.

Following a strong start to the year, European markets suffered a reversal in February. Stronger-than-expected US weekly earnings data, concerns over rising inflation and the possibility of the Federal Reserve (the Fed) hiking interest rates more aggressively than previously expected, as well as a hawkish inaugural congressional testimony from the new Fed chair, Jay Powell, all contributed to a global market sell-off that turned into a correction.

The Eurozone economy remains buoyant, however. The January Eurozone composite Purchasing Manager’s Index (PMI) was confirmed at an eleven-and-a-half-year high (58.8). Although the flash composite PMI slipped to a three-month low in February (57.5), this still indicates strong GDP growth with the single currency area on course for its best quarter in twelve years. Despite the stronger euro, manufacturing enjoyed one of its strongest periods in the PMI’s 20-year history with January’s final manufacturing PMI (59.6). Manufacturing PMI readings also remained close to record highs in Germany and Italy and among the best for 17 years, and a decade, in France and Spain respectively.

Eurozone inflation slowed to a 14-month low in February, underlining the European Central Bank’s caution in removing stimulus despite growth exceeding expectations and the economy on its best footing in a decade.

The Company outperformed the market over the month. Stock selection drove performance, whilst sector allocation was neutral. On a sector basis, the higher allocation towards the technology sector was positive for performance. The higher allocation towards the health care sector, however, detracted from returns as the sector led the market down over the month.

A holding in Wartsila, a Finnish industrial company, was the top performing position over the month. Management delivered a strong set of results, highlighting continued momentum in orders, particularly within the energy and services divisions. A position in cognac manufacturer, Remy Cointreau, also aided performance as it recovered back towards relative highs, driven by expectations of strong Chinese New Year trading. Positive contribution was also driven by Emerging European names ICL Israel Chemicals, which benefited from the rising potash price and a liquidity event, and Turkish listed Enerjisa Enerji which came to market as an IPO in February at an attractive price.

A position in Spanish retailer Inditex proved the poorest performer over the period. The shares came under pressure due to greater foreign exchange headwinds than expected and slowing like-for-like sales trends into the end of the fourth quarter. Whilst disappointing, the results were impacted by timing effects on collection launches, and on a longer-term view, like-for-like sales at 5% for Q4 are in line with the company’s average.

A holding in dental implant manufacturer Straumann also detracted from returns as the company guided for flat margins in 2018. We believe the guidance is conservative and remain confident in the growth of the business, highlighted by the very strong organic growth achieved in the fourth quarter of 18%.

Outlook

Recovery within the euro area remains broad, with the outlook for expansion in both manufacturing and services robust. Indeed, Europe also sees buoyant demand regionally, despite some more testing political situations. Whilst the election outcome in Italy will increase uncertainty in the near-term, we do not believe it derails the European recovery story. It may, however, have implications for EU reform, but broadly we believe the outlook for the European project remains favourable, with a German coalition led by Angela Merkel and pro-reform government in France spearheading the agenda.

Global growth continues to support European earnings and revenues. The Q4 earnings season saw improved revenue trends versus the previous quarter, despite the stronger euro. Whilst the strength of the euro may be a headwind for some companies’ earnings, we believe it is broadly a reflection of the greater economic expansion and current account surplus for the euro area. Valuations in Europe remain undemanding, particularly relative to fixed income, despite recent increases in rates.

Regarding monetary policy, we believe the European Central Bank will remain cautious as inflation continues to undershoot their targets, despite the constructive economic backdrop. As active managers, we believe the higher volatility which has been present in the market due to indicators surprising or rolling over from elevated levels, provides opportunities for the selective investor who can look through short-term noise.

14 March 2018

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.