BlackRock Emerging Europe Plc - Portfolio Update

BLACKROCK EMERGING EUROPE PLC (LEI - 549300OGTQA24Y3KMI14)

All information is at 31 August 2017 and unaudited.

Performance at month end with net income reinvested

   

		One	Three		One				Three		Five		*Since
		Month	Months		Year				Years		Years		30.04.09
	Sterling:
	Share price	4.7%	3.3%		37.6%				47.1%		47.2%		137.2%
	Net asset value	8.5%	8.3%		34.3%				46.3%		42.4%		135.0%
	MSCI EM Europe	9.0%	11.5%		31.2%				21.0%		16.6%		82.4%
	10/40(NR)
	US Dollars:
	Share price	2.4%	3.1%		35.3%				14.1%		19.4%		106.3%
	Net asset value	6.1%	8.1%		32.1%				13.4%		15.5%		104.4%
	MSCI EM Europe	6.5%	11.3%		29.1%				-6.1%		-5.4%		58.6%
	10/40(NR)
	Sources: BlackRock, Standard & Poor’s Micropal
	*BlackRock took over the investment management of the Company with effect from 1 May 2009
	At month end
	US Dollar:
	Net asset value – capital only:							476.20c
	Net asset value* – cum income:							488.94c
	Sterling:
	Net asset value – capital only:							369.58p
	Net asset value* – cum income:							379.47p
	Share price:							339.25p
	Total assets^:							£136.3m
	Discount (share price to cum income NAV):							10.6%
	Net cash at month end:							3.6%
	Net yield^^^^:							1.7%
	Gearing range as a % of Net assets:							0-20%
	Issued Capital – Ordinary Shares^^							35,916,028
	Ongoing charges^^^							1.2%
	* Includes year to date net revenue equal to 9.89 pence per share.
	^ Total assets include current year revenue.
	^^ Excluding 5,000,000 shares held in treasury.
	^^^ Calculated as at 31 January 2017, in accordance with AIC guidelines.
	^^^^ Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise of the final dividend of 7.50 cents per share, (announced on 28 March 2017, ex-dividend on 18 May 2017)
Sector Analysis			Gross  assets  (%)				Country Analysis					Gross  assets  (%)
Financials			30.3				Russia					55.6
Energy			30.2				Turkey					18.0
Consumer Staples			8.4				Poland					11.7
Telecommunication Services			8.3				Greece					7.0
Industrials			5.4				Ukraine					4.5
Materials			4.7				Net current assets					3.4
Information Technology			4.3
Real Estate			2.6
Health Care			2.6
Net current assets			3.4
			-----									-----
			100.2									100.2
			=====									=====
Short positions			(1.9)									(1.9)
Fifteen Largest Investments
	(in % order of Gross Assets as at 31.08.17)
Company				Region of Risk						Gross assets
										(%)
Sberbank				Russia						10.2
Gazprom				Russia						9.6
Novatek				Russia						7.1
Lukoil				Russia						5.1
PKO Bank Polski				Poland						4.2
Rosneft Oil Company				Russia						4.0
Lenta				Russia						4.0
National Bank of Greece				Greece						3.8
Mobile Telesystems				Russia						3.7
Alpha Bank				Greece						3.2
Turk Hava Yollari				Turkey						3.1
PZU				Poland						3.0
TSKB				Turkey						3.0
Garanti Bank				Turkey						2.9
Turkcell				Turkey						2.7
Commenting on the markets, Sam Vecht and Christopher Colunga, representing the Investment Manager noted:
	Market Commentary
	The MSCI Emerging Europe 10/40 Index returned +6.5% in August in US Dollar terms. The Company underperformed the index and returned +6.1% in US Dollar terms.
	All countries in the index posted positive returns. Russia (+8.0%) led the region as the Ruble strengthened by 3.0% helped by higher oil prices and a positive 2nd quarter earnings season. On the economic front, flash estimate for 2nd quarter GDP growth at +2.5% was better than consensus estimates: +1.7% and the 1st quarter: +0.5% (all over the last 12 months). Also, consumer inflation in July grew by 3.9% over the year and was less than expected, creating room for the central bank to continue the interest rate cut cycle further and bring down the cost of borrowing as the economy continues to recover.
	Central European countries also performed strongly with Hungary (+7.6%) leading, followed by Poland (+6.7%) and Czech Republic (+1.8%). The region benefitted from a strong 2nd quarter earnings season, in particular for the banks.
	Turkey (+4.6%) rose over the month as the Turkish Lira strengthened by 1.9% to the end of the month. The 2nd quarter earnings season beat expectations, especially for the large banks. The 12-month current account deficit contracted to US$ 34.3bn (4.1% of GDP) in June from US$ 35.5bn (4.3% of GDP) in May primarily due to the 13% contraction in the merchandise trade deficit and the 30% increase in tourism revenues over the year.
	After a strong rally in summer, Greece cooled down in August although it ended the month in positive territory (+1.1%). The 2nd quarter GDP grew +0.5% vs expectations of 0.2% over the quarter, ESI (Economic Sentiment Indicators) were up to a two-year high of 99.0 and July PMI (Purchasing Manager Index) rose to 52.2 marking its highest reading since August 2008.
	Focus on: Sberbank
	Sberbank is Russia’s largest bank, state-owned. It has branches throughout the country and a 46% share in the retail deposit market. The stock performed well in 2016 amid Russian macro recovery and strong performance post OPEC production cut agreement, as well as continuing company’s restructuring strategy to improve its services and enhance efficiency.
	We have been adding to our position in the stock since March 2017 on the basis of its strong fundamentals, attractive valuation, low cost of risk and ability to continue optimising the costs. Furthermore, as the Russian economy and consumer sector continue to recover and the central bank cuts the key policy rate, we expect the bank to see increased loan growth, in particular in mortgages. The stock has seen a pick-up in its price over the last 4 months in line with its strong 2nd quarter results and the lift in guidance on loans picking up. The recent strengthening in the Ruble and the interest rate cuts provided a further support to the bank’s NIMs (Net Interest Margins) through the year end.
	20 September 2017
	ENDS
	Latest information is available by typing www.blackrock.co.uk/beep 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.

Copyright r 20 PR Newswire