BlackRock Emerging Europe Portfolio Update

 
TIDMBEEP 
 
BLACKROCK EMERGING EUROPE PLC (LEI - 549300OGTQA24Y3KMI14) 
 
All information is at 31 October 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              2.2         7.9                    26.7        56.3        43.8       144.6 
 
 Net asset value          1.3         5.3                    18.2        46.4        35.0       127.9 
 
 MSCI EM Europe           0.9         4.1                    13.7        19.9         7.7        74.3 
 
 10/40(NR) 
 
 US Dollars: 
 
 Share price              1.1         8.8                    37.8        29.7        18.5       119.2 
 
 Net asset value          0.3         6.0                    28.5        21.5        11.3       104.3 
 
 MSCI EM Europe          -0.1         4.9                    23.7        -0.5      -11.24        56.2 
 
 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:                                                              473.47c 
 
 Net asset value* - cum income:                                                               488.77c 
 
 Sterling: 
 
 Net asset value - capital only:                                                              356.52p 
 
 Net asset value* - cum income:                                                               368.04p 
 
 Share price:                                                                                 349.75p 
 
 Total assets^:                                                                               GBP132.2m 
 
 Discount (share price to cum income NAV):                                                       5.0% 
 
 Net cash at month end:                                                                          3.1% 
 
 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 11.52 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 assets      Country                                      Gross 
Analysis                                  (%)      Analysis                                    assets 
                                                                                                  (%) 
 
Energy                                  33.1       Russia                                       56.1 
 
Financials                              31.2       Poland                                       18.1 
 
Telecommunication Services              10.5       Turkey 
                                                                                          11.6 
 
Consumer Staples                         7.5       Greece                                        6.3 
 
Materials                                4.4       Ukraine                                       4.0 
 
Information Technology                   4.2       Romania 
                                                                                           1.0 
 
Real Estate                              2.6       Net current assets 
                                                                                           2.9 
 
Health Care                              2.4 
 
Industrials                              1.2 
 
Net current assets                      2.9 
 
                                       -----                                                   ----- 
 
                                       100.0                                                   100.0 
 
                                       =====                                                   ===== 
 
Short positions                         (2.0)                                                   (2.0) 
 
 
 
Fifteen Largest Investments 
 
 (in % order of Gross Assets as at 31.10.17) 
 
Company                             Region of Risk                                   Gross assets 
 
                                                                                              (%) 
 
Gazprom                             Russia                                                   10.2 
 
Lukoil                              Russia                                                    8.2 
 
Sberbank                            Russia                                                    6.6 
 
PKO Bank Polski                     Poland                                                    6.4 
 
Novatek                             Russia                                                    4.9 
 
Rosneft Oil Company                 Russia                                                    4.2 
 
Lenta                               Russia                                                    4.0 
 
Mobile Telesystems                  Russia                                                    3.9 
 
Bank Pekao                          Poland                                                    3.6 
 
PZU                                 Poland                                                    3.4 
 
Alpha Bank                          Greece                                                    3.2 
 
National Bank of Greece             Greece                                                    3.1 
 
Norilsk Nickel                      Russia                                                    2.9 
 
Megafon                             Russia                                                    2.8 
 
Mail.Ru                             Russia                                                   2.7 
 
 Commenting on the markets, Sam Vecht and Christopher Colunga, representing the 
 Investment Manager noted; 
 
 The MSCI Emerging Europe 10/40 Index was relatively flat in October, declining 
 -0.1%* in USD terms, as stronger growth outlook in the US led to higher bond 
 yields, putting pressure on EM currencies. The Company outperformed the index 
 over the period, returning +0.3%* in USD terms. 
 
 Central Europe outperformed as currencies strengthened against the Euro. Poland 
 (+3.3%**) and the Czech Republic (+2.1%**) both saw 2Q17 GDP data surprise to 
 the upside, with support from private consumption. Hungary (+5.0%**) was the 
 region's top performer despite slowing GDP, driven by stronger fixed investment 
 and a rebound in public consumption, after three quarters of sequential 
 decline. Turkey was relatively flat through October, despite the Lira 
 depreciating by -6.0%**, resulting in its lowest monthly close. Bond yields 
 rose to their highest levels since the financial crisis despite the Central 
 Bank maintaining their effective lending rate at 12%** in the eyes of peaking 
 inflation. Greece continues to lag the region, declining -2.1%** in September 
 as the EU regulator continues its review of the country's non-performing 
 exposures and their subsequent reduction plans. Russia (-2.3%**) was the 
 region's worst performing market on specific earnings misses, despite a strong 
 month for oil prices, given tightness in supply-demand fundamentals and 
 geopolitical tensions in the Middle East. 
 
 
 Focus on: Polish Banks 
 
 The Central European 3 sub-region has been a standout performer YTD within 
 emerging markets, on the back of stronger than expected growth, led by 
 improving consumption and an uptick in fixed investment. Central European banks 
 have been some of the top performers over this period despite largely driven by 
 strong loan growth and improving cost management 
 
 Within the region, Polish banks have been our preferred points of exposure 
 because they are among the most interest rate sensitive given that the majority 
 of loans in the county are floating. Resultantly even a mild interest rate 
 hike, ie 100bp, will see bank earnings up between 20-50% bank dependent. Given 
 the strong economic growth in the country coupled with a tight labour market as 
 seen in the rising wage inflation, we believe Poland may have to begin hiking 
 rates sooner than the market expects. Specifically, PKO and Bank Pekao are both 
 among the company's top ten holdings. We've recently increased our position in 
 Pekao as it has lagged peers following the polish government buying a stake. We 
 are of the opinion that the dividend is likely to continue to be paid, and as 
 such saw the sell off as overdone given the strong underlying dynamics at the 
 bank. 
 
 
 *Source: BlackRock, data as at end October 2017. 
 **Source: JPM, data as at end October 2017. 
 
 21 November 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

November 21, 2017 09:25 ET (14:25 GMT)