Portfolio Update

BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at31 January 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)	1.9%	1.6%	21.1%	50.9%	353.1%
Net asset value* (diluted)	1.9%	1.6%	21.1%	51.0%	353.5%
Share price	-0.3%	-0.1%	20.2%	50.9%	335.4%
FTSE World Europe ex UK	1.2%	0.2%	18.2%	44.0%	248.7%

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

At month end

Net asset value (capital only):	352.77p
Net asset value (including income):	353.73p
Net asset value (capital only)1:	352.77p
Net asset value (including income)1:	353.73p
Share price:	337.00p
Discount to NAV (including income):	4.7%
Discount to NAV (including income)1:	4.7%
Net gearing:	0.8%
Net yield2:	1.6%
Total assets (including income):	£314.1m
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	33.2		Switzerland	17.8
Health Care	16.3		France	17.4
Consumer Goods	14.1		Netherlands	13.2
Consumer Services	12.8		Germany	12.5
Financials	9.8		Denmark	12.1
Technology	7.8		Sweden	8.2
Oil & Gas	4.5		Belgium	6.2
Basic Materials	2.3		Russia	4.5
Net current liabilities	(0.8)		Finland	3.4
	-----		Spain	3.4
	100.0		Greece	1.6
	=====		Ukraine	0.5
			Net current liabilities	(0.8)
				-----
				100.0
				=====

Ten Largest Equity Investments
Company	Country	% of Total Assets
Unilever	Netherlands	4.7
Fresenius Medical Care	Germany	4.5
Safran	France	4.3
Lonza Group	Switzerland	3.9
Compagnie Financière Richemont	Switzerland	3.7
Danske Bank	Denmark	3.7
Novo Nordisk	Denmark	3.6
RELX	Netherlands	3.6
Wartsila	Finland	3.4
Telenet	Belgium	3.4

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

During the month, the Company’s NAV rose by 1.9% and the share price fell by 0.3%. For reference, the FTSE World Europe ex UK Index returned 1.2% during the period.

The Europe ex UK market had a positive start to the year. The underlying composition of market returns was influenced by the falling US dollar versus the Euro and rising rate environment. In this risk-on context, financials, particularly banks, as well as the consumer discretionary sector, led the market. Defensive areas of the market, those less influenced by the economic environment, including utilities and consumer staples, lagged.

The Eurozone recorded its highest annual growth rate in a decade in 2017, with GDP growth of 2.5%. All major Eurozone economies reported accelerating services and manufacturing activity and the final December manufacturing Purchasing Manager’s Index was the highest since data started in 1997 (60.6). Eurozone unemployment fell to a nine-year low in November (8.7%), the lowest since January 2009.

At its meeting on 25 January, the European Central Bank (ECB) left policy unchanged. The Bank reaffirmed its ultra-easy monetary policy, promising to keep rates steady until well after the end of its bond-buying and maintaining a pledge to boost the purchases if necessary. Eurozone inflation slowed further in January, underpinning the ECB’s caution. Inflation in the 19-country bloc dipped to 1.3% in January from 1.4% in December.

The Company outperformed the market over the month. Stock selection drove performance, whilst sector allocation detracted.

On a sector basis, the lower allocations to financials detracted from returns, as this rate sensitive sector led the market.  Conversely, consumer services exposed stocks, where the Company holds a higher weight, were negatively impacted by the rate environment and thus also detracted from returns. The lower allocation towards utilities was beneficial.

A holding in Adidas contributed to returns. The shares saw some recovery from their relative setback, related to management guidance. The message coming from management proved stronger, with a reassuring outlook on their key markets and a reiterated focus on growing US market share, where they remain underpenetrated. The company continues to look for mid-high single digit revenue growth out to 2020.

Holdings within the technology space also proved profitable, with strong performance in Hexagon and ASML. The former saw a relief rally as the CEO was cleared of charges in an ongoing investigation. ASML posted strong fourth quarter results. Revenues were up 34% year-on-year, 15% ahead of consensus expectations. Gross margin also came in 1% ahead of expectations.

Our exposure to the energy sector, where we have holdings within Emerging Europe, also aided returns.

A holding in Remy Cointreau detracted from returns as it saw FX related downgrades to earnings. However, the company reported robust results against a tough comparative with encouraging trends in depletion and pricing. A holding in RELX also detracted on broker news flow around potential competitive threats.  

Outlook

The euro area recovery appears broad and sustainable. The pillars of demand are in place to allow a continuation of growth above the recent historic average. The economy looks at little risk of over-heating in the near term as slack continues to exist. Despite falling unemployment and increasing consumer confidence driving higher demand, euro area core inflation remains sluggish and continues to undershoot the ECB’s target levels. Monetary policy is therefore likely to remain accommodative and any withdrawal of liquidity will be slow and done with caution. The robustness of the economy, and relatively quiet political environment, is allowing for growth in earnings and corporate investment. The caution borne by corporates in the euro area in the wake of both the financial crisis and euro crisis has left them in a healthy financial situation. Alongside continued favourable financing conditions, this is providing opportunities for re-leveraging and M&A activity, which could further support earnings in the region. Whilst the market overall is trading around its historical average range, we believe a selective approach can help identify attractively valued investment opportunities in a market where strategic decision making and corporate investment is creating increasing disparity between winners and losers.

12 February 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.