BLACKROCK GREATER EUROPE
INVESTMENT TRUST plc (LEI - 5493003R8FJ6I76ZUW55)
All information is at 30 April
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) |
4.1% |
12.7% |
9.3% |
51.1% |
386.4% |
Net asset value*
(diluted) |
4.1% |
12.7% |
9.3% |
52.2% |
386.9% |
Share price |
5.0% |
13.2% |
11.0% |
53.9% |
372.0% |
FTSE World Europe ex
UK |
4.0% |
8.9% |
2.5% |
41.9% |
250.4% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
Net asset value
(capital only): |
370.99p |
Net asset value
(including income): |
373.49p |
Net asset value
(capital only)1: |
370.99p |
Net asset value
(including income)1: |
373.49p |
Share price: |
359.00p |
Discount to NAV
(including income): |
3.9% |
Discount to NAV
(including income)1: |
3.9% |
Net gearing: |
3.1% |
Net
yield2: |
1.6% |
Total assets
(including income): |
£317.5m |
Ordinary shares in
issue3: |
85,018,101 |
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
25,310,837 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 |
30.6 |
|
France |
17.7 |
Health Care |
19.7 |
|
Switzerland |
16.6 |
Technology |
17.6 |
|
Denmark |
14.7 |
Consumer Goods |
10.8 |
|
Germany |
13.2 |
Financials |
8.3 |
|
Italy |
7.3 |
Consumer Services |
7.9 |
|
Netherlands |
6.1 |
Basic Materials |
4.0 |
|
Spain |
5.2 |
Telecommunications |
1.7 |
|
Sweden |
4.9 |
Net current
liabilities |
-0.6 |
|
United
Kingdom |
4.3 |
|
----- |
|
Israel |
3.3 |
|
100.0 |
|
Ireland |
2.3 |
|
|
|
Finland |
2.1 |
|
|
|
Belgium |
1.8 |
|
|
|
Greece |
1.1 |
|
|
|
Net
current
liabilities |
-0.6 |
|
|
|
|
----- |
|
|
|
|
100.0 |
Ten Largest Equity Investments |
|
|
|
Company |
Country |
%
of
Total Assets |
|
Safran |
France |
6.4 |
|
SAP |
Germany |
6.2 |
|
Novo
Nordisk |
Denmark |
5.5 |
|
Sika |
Switzerland |
5.4 |
|
DSV |
Denmark |
4.3 |
|
RELX |
United Kingdom |
4.3 |
|
Lonza
Group |
Switzerland |
4.1 |
|
ASML |
Netherlands |
3.8 |
|
Kering |
France |
3.5 |
|
Adidas |
Germany |
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commenting on the markets,
Stefan Gries, representing the
Investment Manager noted:
During the month, the Company’s NAV rose by 4.1% and the share
price rose by 5.0%. For reference, the FTSE World Europe ex UK
Index returned 4.0% during the period.
Equity markets continued to rebound in April with Eurozone
markets posting the largest gains. Within Europe, IT and consumer discretionary stocks
led the market upturn with financials and industrials closely
following as cyclical sectors outperformed. Some tentatively
stronger data out of China aided
the autos sector in particular. Despite gains in the oil price,
energy stocks continued to underperform.
The European Central Bank (ECB) left policy unchanged and
reiterated its plan not to hike interest rates this year. ECB
President Mario Draghi conceded that
data since policymakers last met in early March confirmed “slower
growth momentum extending into the current year”.
The Company performed in line with the index over April. Whilst
sector allocation was additive for performance, stock selection
proved a small negative detractor over the month.
On a sector basis our larger allocation to the industrials
sector versus the reference index was additive to returns, as was
our larger allocation to technology. Both these sectors were
boosted over the month by stronger fundamentals shown through the
company earnings season. The higher allocation to the health care
sector, however, detracted from performance. The sector proved more
volatile amid policy rhetoric from the US. This is likely to be an
overhang for the sector leading up to the next US Presidential
elections, but we believe strong fundamental opportunities persist
within the space which should be less impacted by legislative
changes.
A position in chemicals business Sika, one of the largest active
weights in the Company, was the top performer over the period. The
company had a strong start to the year reporting a 7.1% growth in
sales. The gross margin recovery remains on track driven by pricing
measures. Management also confirmed the acquisition of French
competitor Parex being on schedule. Despite highlighting tougher
market conditions and a tighter labour market in the US, Sika stuck
with its full year targets of 6-8% growth (excluding the Parex
deal), and a return to disproportionate growth in profits.
The market reacted positively to strong results from software
giant SAP, which grew its top-line by an impressive 12% at constant
exchange rates. This growth was driven in particular by 41%
year-on-year growth in cloud revenues, as well as better than
expected license revenue numbers. French semiconductor stock
STMicroelectronics was also amongst the top performers, as
management gave a more positive outlook for the second half of the
year which was taken positively by the market. Within the same
sector, Dutch chip equipment maker ASML and Germany’s Infineon
equally contributed positively to returns.
A holding in Danish pharma stock Novo Nordisk was the single
largest detractor. Following strong performance over the last few
months, shares in Novo Nordisk fell on US regulatory worries during
April. Lonza and Straumann were also dragged down with the sector;
however, the Company benefited from avoiding large cap defensive
names like Roche, Novartis and Sanofi.
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
With the potential for economic indicators, particularly those
relating to the industrial economy, bottoming out in the near term,
Europe may be moving back towards
trend growth in the second half of 2019. Alongside the need for
some Chinese related good fortune, the European economy looks
reasonably positioned with a resilient consumer, high capacity
utilisation rates and attractive funding costs. We believe these
factors are likely to drive capex higher through 2019. We have
begun to see tentative signs of the end of the earnings downgrade
cycle, confirming that the recent setback is a mid-cycle slowdown
as opposed to a recessionary environment. With a combination of
improving earnings, undemanding valuation and potential inflection
in indicators, we believe investors are more likely to reassess
their underweight position to the region. Within our portfolios we
have a preference for industrial, health care and technology
companies, assessing earnings opportunities through the lenses of
wealth creation, resilience and change. We broadly avoid positions
within financials, particularly banks, telecoms and
materials.
22 May 2019