Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at31 August 2017 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)	4.4%	5.2%	23.0%	54.4%	340.1%
Net asset value* (diluted)	4.4%	5.2%	23.0%	54.5%	340.5%
Share price	4.3%	1.9%	22.9%	52.5%	319.2%
FTSE World Europe ex UK	2.8%	3.4%	26.0%	47.3%	246.8%

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

At month end

Net asset value (capital only):	343.32p
Net asset value (including income):	347.12p
Net asset value (capital only)1:	343.32p
Net asset value (including income)1:	347.12p
Share price:	328.00p
Discount to NAV (including income):	5.5%
Discount to NAV (including income)1:	5.5%
Net gearing:	1.4%
Net yield2:	1.6%
Total assets (including income):	£330.8m
Ordinary shares in issue3:	95,295,953
Ongoing charges4:	1.07%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.65p per share for the year ended 31 August 2016 and an interim dividend of 1.75p per share for the year ending 31 August 2017.
3  Excluding 15,032,985 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 2016.
 

Sector Analysis	Total  Assets  (%)		Country Analysis	Total  Assets  (%)
Industrials	29.3		France	16.7
Health Care	16.1		Switzerland	13.8
Consumer Services	13.0		Denmark	13.0
Consumer Goods	12.9		Netherlands	11.8
Financials	9.8		Germany	11.6
Technology	9.2		Sweden	8.3
Oil & Gas	5.0		Russia	6.6
Basic Materials	4.4		Belgium	5.4
Net current assets	0.3		Finland	3.6
	-----		Ireland	3.2
	100.0		Spain	2.8
	=====		Greece	1.7
			Ukraine	1.2
			Net current assets	0.3
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
Unilever	Netherlands	4.4
Bayer	Germany	4.3
Lonza Group	Switzerland	4.1
SAP	Germany	4.0
ASML	Netherlands	4.0
Compagnie Financière Richemont	Switzerland	3.9
Kering	France	3.6
Wartsila	Finland	3.6
RELX	Netherlands	3.5
Novo-Nordisk	Denmark	3.4

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

During the month, the Company’s NAV rose by 4.4% and the share price increased by 4.3%. For reference, the FTSE World Europe ex UK Index was up 2.8% during the period.

Political uncertainties and rising tensions emanating from North Korea drove investors to perceived safer assets, including stocks within the utilities sector which led the market during the month. The materials sector also saw strong performance given the increase in metal prices, while telecoms and financials lagged the market.

The euro continued to appreciate in August hitting a three-year high versus the US dollar.

Macro data was mixed over the month, however euro area GDP growth proved stable, being confirmed at 2.5% in the three months to June. The euro area manufacturing PMI rose slightly while the services PMI came in weaker than expected. Equally, the German IFO business climate survey fell in August, while Italy’s consumer confidence proved fairly strong.

The political environment remains relatively stable within the euro area as Macron moves forward with his agenda of labour market reform in France and opinion polls point to a continuation of Merkel’s leadership in Germany.

The Company outperformed the reference index over the month. Stock selection drove returns, whilst sector allocation marginally detracted.

On a sector basis, the higher allocation to the consumer services sector detracted from returns, as did the lower weighting towards the utility sector. Positively, the lower weighting towards financials benefited the Company as the sector underperformed.

Despite underperformance of financials as a sector, the best performing holding during the month was Sberbank. The Russian bank contributed to performance following their earnings release where they beat market expectations and upgraded their guidance.

Positive performance also came from holdings in a number of med-tech names which posted strong results, including Lonza and Straumann. With regards to the latter, the company commented on an increasing rate of growth in the second quarter over the first. They also announced a strategic acquisition of ClearConnect, a provider of clear orthodontics, a market space which is growing in double digits. The shares reacted exceptionally positively to management’s earnings announcement, closing up 11% on the day.

The Company benefited from a holding in DSV which beat expectations in its Q2 earnings release, with earnings before interest and tax 6% ahead of consensus. On the back of this, the company raised their earnings guidance for the full year and also announced a 1bn DKK share buyback, which again was ahead of market expectations.

In addition, a holding in Kering was also amongst the top performers. Whilst headline growth numbers were in line, the underlying appeared to accelerate with Q2 organic growth up by 24%, largely driven by the Gucci brand which saw 39% organic growth in the quarter. The company continues to be disciplined on capital and experiencing increasing free cash flow returns.

Less positively, an allocation to Ukrainian IT company Luxoft was the main source of detraction after the stock tumbled over 30% following disappointing earnings and a lowering of guidance, as the company is experiencing slowing business trends from their clients on IT outsourcing.

Outlook

Europe’s recovery remains on track. Whilst it is difficult to separate the economic benefits of the wider global expansion on the eurozone, compared to the improving fundamentals of the eurozone itself, we believe the background of an accommodative European Central Bank, subdued inflation and falling political risk in the region have underpinned the attraction of European equities. Importantly, earnings remain robust in the Q2 reporting season, with companies beating earnings expectations across the breadth of market sectors. Whilst we recognise that a strengthening euro could to an extent dampen earnings potential going forward, we would note that it is in most cases a company specific issue, given variability in cost and revenue FX exposures, and therefore increases the importance of being selective. Indeed, while valuation remains undemanding relative to other developed market equities and bonds, we believe selectivity is paramount as valuation appears stretched in certain areas of the market.

As unemployment falls and business confidence grows, we believe the European recovery remains intact and retain our confidence that investors will continue to increase weightings to this asset class.

12 September 2017

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.