BlackRock Emerging Europe Portfolio Update

 
TIDMBEEP 
 
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^:                                                                    GBP136.3m 
 
 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                                Gross     Country                             Gross 
Analysis                             assets     Analysis                           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. 
 
 
 
 
END 
 

(END) Dow Jones Newswires

September 20, 2017 09:44 ET (13:44 GMT)