BlackRock Greater Europe Investment Trust Plc - Portfolio Update
PR Newswire
London, January 18
The information contained in this release was correct as at 31 December 2020. Information on the Company's up to date net asset values can be found on the London Stock Exchange Website at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC (LEI - 5493003R8FJ6I76ZUW55)
All information is at 31 December 2020 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) | 4.5% | 12.6% | 30.0% | 59.6% | 609.6% |
| Net asset value* (diluted) | 4.9% | 12.6% | 30.4% | 59.5% | 609.9% |
| Share price | 6.4% | 18.3% | 32.2% | 64.5% | 618.6% |
| FTSE World Europe ex UK | 2.3% | 9.2% | 8.6% | 18.5% | 308.1% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 528.34p |
| Net asset value (including income): | 529.01p |
| Net asset value (capital only)1: | 528.34p |
| Net asset value (including income)1: | 529.01p |
| Share price: | 530.00p |
| Discount to NAV (including income): | 0.2% |
| Discount to NAV (including income)1: | 0.2% |
| Net gearing: | 5.8% |
| Net yield2: | 1.2% |
| Total assets (including income): | 446.1m |
| Ordinary shares in issue3: | 84,323,101 |
| Ongoing charges4: | 1.0% |
1 Diluted for treasury shares.
2 Based on an interim dividend of 1.75p per share and a final dividend of 4.40p per share for the year ended 31 August 2020.
3 Excluding 26,005,837 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 2020.
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| Top 10 holdings | Country | Fund % |
| ASML | Netherlands | 6.6 |
| Sika | Switzerland | 5.6 |
| Kering | France | 5.2 |
| Lonza Group | Switzerland | 5.1 |
| Royal Unibrew | Denmark | 4.7 |
| Novo Nordisk | Denmark | 4.6 |
| DSV | Denmark | 4.4 |
| Safran | France | 3.5 |
| Hexagon | Sweden | 3.5 |
| RELX | United Kingdom | 3.5 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company's NAV rose by 4.5% and the share price by 6.4%. For reference, the FTSE World Europe ex UK Index returned 2.3% during the period.
Europe ex UK markets continued to rise during December, although at more muted levels than we saw in November following the vaccine news. Although vaccination programmes have started across Europe, many countries have tightened lockdown rules as cases continue to rise and a new variant, coming from the UK, started to spread. Cyclical assets including technology, oil & gas, consumer goods and basic materials outperformed defensive sectors such as telecommunications and healthcare.
A Brexit deal was finally announced towards the end of the month, which is clearly positive for market sentiment but not necessarily a game changer for this Company, given our limited exposure to the UK. Macro data remains fairly strong and markets are optimistic going into the new year: this combined with weaker comparative bases over the next few quarters can lead to some solid upgrades in 2021.
Overall, the Company outperformed the reference index during the month of December, finishing off an overall strong performance year. In sector terms, the Company benefited from its higher allocation to technology, as well as its lower exposure to telecommunications and financials. A lower allocation to consumer goods and a higher exposure to healthcare detracted from returns.
Positive contribution came from strong stock selection within financials. In particular, our position in Russian Sberbank was the top contributor rising in the risk on environment. This stock was held for is fundamental attractions including the potential for earnings upgrades, its cheap valuation and a high dividend yield. Following its rally in December, the stock hit our price target and we exited the position. A position in Greek Alpha Bank also contributed positively.
The Company's positioning within technology also aided returns. In particular, semiconductor exposed names including ASML and BE Semiconductor were amongst the top performers. The outlook for the semiconductor industry remains positive due to demand strength in the various different end markets they serve. Within the automotive end market especially, several clients have noted shortages in semiconductor components, confirming a real tightness in the market.
Within healthcare, Chemometec was amongst the top contributors in December, with the company's cell-counting technology supported by clinical data presented at the recent American Society of Haematology conference. The stock continued to move up in anticipation of further positive trading news.
Royal Unibrew was another strong performer over the month, having released Q3 results towards the end of November which were better than expected. This release highlighted share gains made across most regions and categories, as well as the disciplined cost control exercised by management, which has been helpful in COVID times. Meanwhile, it has been very beneficial that their main markets (Finland, Denmark, the Baltics) were generally less affected by COVID restrictions.
This month's largest detractor was a position in Kingspan. Shares fell as one of Kingspan's insulation products was found to have been used on Grenfell tower, which tragically burned down in London in June 2017. Kingspan's product accounted for around 5% of insulation material on the tower, however Kingspan had no involvement in the construction, nor did they recommend use of its product for the tower. While we believe we may now have seen the worst of the bad news priced into shares with little impact thus far on Kingspan operations, we are reviewing our position carefully. Elsewhere, on the negative side, Safran, which had rebounded strongly in November, took a breather and experienced weaker performance as the ongoing lockdowns continue to affect air travel into early 2021.
At the end of the period, the Company had a higher allocation than the reference index towards technology, consumer services, industrials and health care. The Company had a neutral weighting towards oil & gas and an underweight allocation to consumer goods, financials, utilities, basic materials and telecoms.
Outlook
In a tumultuous year, European equity markets ended 2020 with relative strength. We see this strength persisting into 2021 aided by better virus testing capabilities, a successful vaccine rollout and a resilient global consumer, alongside continued accommodative policy. Recovery will not be equal across all sectors: some still lack pricing power and are unable to reinstate dividends; others, however, such as travel exposed stocks, could see a meaningfully brighter 2021. Inflation may be on the horizon, but rates will likely remain low. A period of prolonged negative real rates and higher nominal growth is needed to allow governments globally to work their way out of the post pandemic debt overhang. We see this as being a supportive backdrop for equities.
18 January 2021
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.
