BLACKROCK GREATER EUROPE INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at30 June 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) | -1.3% | 5.7% | 22.6% | 39.0% | 312.9% |
Net asset value* (diluted) | -1.3% | 5.7% | 22.6% | 39.0% | 313.3% |
Share price | -3.0% | 5.7% | 24.7% | 38.6% | 298.8% |
FTSE World Europe ex UK | -1.3% | 5.2% | 29.0% | 38.4% | 231.2% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): | 322.70p |
Net asset value (including income): | 325.69p |
Net asset value (capital only)1: | 322.70p |
Net asset value (including income)1: | 325.69p |
Share price: | 312.00p |
Discount to NAV (including income): | 4.2% |
Discount to NAV (including income)1: | 4.2% |
Net gearing: | 6.2% |
Net yield2: | 1.7% |
Total assets (including income): | £310.4m |
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 | 23.3 | Netherlands | 15.7 | |
Financials | 16.0 | Germany | 15.4 | |
Health Care | 15.3 | France | 15.1 | |
Consumer Services | 12.2 | Denmark | 11.0 | |
Consumer Goods | 10.4 | Switzerland | 9.6 | |
Technology | 7.3 | Russia | 8.2 | |
Basic Materials | 6.9 | Sweden | 5.5 | |
Oil & Gas | 6.9 | Finland | 4.8 | |
Telecommunications | 2.4 | Spain | 2.9 | |
Net current liabilities | (0.7) | Belgium | 2.7 | |
----- | Ireland | 2.2 | ||
100.0 | Poland | 1.9 | ||
===== | Turkey | 1.7 | ||
Luxembourg | 1.5 | |||
Ukraine | 1.5 | |||
Greece | 1.0 | |||
Net current liabilities | (0.7) | |||
----- | ||||
100.0 | ||||
===== |
Ten Largest Equity Investments | ||
Company | Country | % of Total Assets |
Fresenius | Germany | 4.6 |
Bayer | Germany | 3.9 |
RELX | Netherlands | 3.3 |
Lonza Group | Switzerland | 2.9 |
Compagnie Financière Richemont | Switzerland | 2.9 |
Sberbank | Russia | 2.9 |
Industria De Diseño Textil | Spain | 2.9 |
Vinci | France | 2.9 |
DSV | Denmark | 2.7 |
ASML | Netherlands | 2.7 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV fell by 1.3% and the share price fell by 3.0%. For reference, the FTSE World Europe ex UK Index was down 1.3% during the period.
Europe ex UK equities performance stalled in June as central bankers’ rhetoric moved increasingly towards talk of normalization of monetary policy. However, positively for the region, fears of the populist revolt spreading to Europe from the US and UK abated with Emmanuel Macron winning a decisive majority in the French parliamentary elections on 18 June, giving him considerable power to implement economic reform. In Italy, the right-wing Five Star movement suffered a broad-based defeat in local elections, less than a year before national elections, which must be held by the first half of 2018 and could come as early as Autumn. Despite a marginal slowdown in June, Q2 was still the strongest quarter of economic expansion in over six years in the Euro area and job creation was one of the strongest recorded over the past decade as firms continued to expand capacity to meet rising demand.
The Company performed in line with the reference index over the month. Stock selection proved beneficial; however, this was largely offset by negative sector allocation.
The lower weighting towards the financials sector dragged on performance. The lower weighting to European banks in particular was negative in this respect as the sector moved higher in-step with bond yields towards the end of the month. In contrast, those sectors which are less cyclical in nature sold off during the period. The Company’s underweight allocation to telecoms aided in this regard.
Stock selection was strong across a number of sectors in June. In particular, the Company benefited from a number of holdings within the health care sector such as Lonza Group and Straumann which have seen strong earnings upgrades year to date. Equally, not holding Roche contributed positively to performance. The share price fell as “APHINITY†trial data disappointed the market. The trial showed that a new combination of drugs was only marginally better than an older medicine made by the company in the treatment of breast cancer.
Within the consumer space, the Company also saw strong performance from Cognac producer Rémy Cointreau. Strong data on Cognac shipments for May, with specific reference to strength in premium brands, aided the company which is well positioned in this area. A position in luxury goods holding company Kering also performed strongly, with excellent brand momentum in Gucci helping drive the share price.
Less positively, the Company experienced losses from a holding in Ahold Delhaize, which sold off on the back of news that Amazon was to acquire Wholefoods. We believe the share price reaction here was in excess of any impact Ahold Delhaize may see on earnings given the small overlap in the competitive landscape in the two businesses, particularly in the short to medium-term.
Outlook
The global expansion continues at a steady pace, with Eurozone economic growth steadily advancing but inflation remaining well below target. Near-term political risks are fading for the time being, causing investors to begin to return to the asset class following a protracted period of outflows. Following Macron’s election and subsequent success in parliamentary elections, Europe may have its best opportunity in decades to push through reforms that make the European Union more sustainable and effective. European earnings are reflecting global improvement, as evidenced by the strong first-quarter reporting season, which has been the best in several years. The pick-up in sales growth has led to a clear recovery in profits. In terms of valuation, European equities are relatively inexpensive when compared with fixed income and especially in terms of dividend yield. Structural reforms could unlock Europe’s growth potential and narrow the discount over time.
13 July 2017
ENDS
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