BlackRock Greater Europe Investment Trust Plc - Portfolio Update

BlackRock Greater Europe Investment Trust Plc - Portfolio Update

PR Newswire

LONDON, United Kingdom, July 17

The information contained in this release was correct as at 30 June 2024. 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 30 June 2024 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)	0.7%	-2.4%	15.6%	9.6%	812.8%
Share price	-1.4%	-3.5%	15.3%	0.4%	765.7%
FTSE World Europe ex UK	-1.6%	0.3%	13.4%	22.0%	452.3%

Sources: BlackRock and Datastream
 

 

At month end

Net asset value (capital only):	649.95p
Net asset value (including income):	655.53p
Share price:	614.00p
Discount to NAV (including income):	6.3%
Net gearing:	8.3%
Net yield1:	1.1%
Total assets (including income):	£654.2m
Ordinary shares in issue2:	99,795,601
Ongoing charges3:	0.98%

 

1  Based on a final dividend of 5.00p per share for the year ended 31 August 2023 and  an interim dividend of 1.75p per share for the year ending 31 August 2024.

2  Excluding 18,133,337 shares held in treasury.
3  The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation, write back of prior year expenses and certain non-recurring items for the year ended 31 August 2023.

 

Sector Analysis Total Assets (%) Industrials 24.4 Technology 23.5 Consumer Discretionary 22.4 Health Care 14.7 Financials 8.1 Basic Materials 6.2 Consumer Staples 0.8 Net Current Liabilities -0.1   -----    100.0   =====

Country Analysis Total Assets (%) Netherlands 22.4 France 20.6 Switzerland 17.5 Denmark 10.6 United Kingdom 6.5 Sweden 6.2 Ireland 5.6 Italy 3.7 United States 3.5 Germany 1.8 Belgium 1.7 Net Current Liabilities -0.1   -----   100.0   =====

 

 

Top 10 holdings	Country	Fund %
Novo Nordisk	Denmark	9.4
ASML	Netherlands	8.4
RELX	United Kingdom	6.5
LVMH	France	5.5
BE Semiconductor	Netherlands	4.6
ASM International	Netherlands	4.4
Hermès	France	3.9
Safran	France	3.8
Schneider Electric	France	3.7
Ferrari	Italy	3.7

 

Commenting on the markets, Stefan Gries and Alexandra Dangoor, representing the Investment Manager noted:

 

During the month, the Company’s NAV rose by 0.7% and the share price declined by -1.4%. For reference, the FTSE World Europe ex UK Index returned -1.6% during the period.

 

French political uncertainty led to market volatility. President Macron called an unexpected election which led to concerns that a future government might come in with a less fiscally responsible agenda. While creating negative market sentiment in the near term, we think that a lack of clear mandate for either the French right-wing populist party RN or the left-wing means that there is a low chance that policies could have a significant direct negative impact on our portfolio holdings.

 

During the month we saw high quality, internationally exposed businesses outperform the market whilst particularly French-listed cyclicals and financials performed poorly. The technology sector delivered absolute positive returns given very limited impact from French election risk and continued positive messaging around the ‘AI investment wave’ coming.

 

The Company outperformed the reference index thanks to its positioning in technology and limited exposure to French domestic stocks, as well as an underweight to financials. Both sector allocation and stock selection contributed positively.

 

Semiconductors were amongst the top performers during June with shares in BE Semiconducter (Besi), ASMi and ASML all moving higher. The tone from management teams during roadshows was positive and all signs point to increased orders ahead. Besi hosted a Capital Markets Day in the month where their CEO reiterated a target model of over EUR 1bn sales over time (growing from EUR 580m in 2023).

 

A position in RELX was also additive in June. RELX has been consistent in confirming strong underlying trends, particularly on the back of AI trends in their legal division.

 

Owning Novo Nordisk contributed positively to active returns in June with the investment case continuing to progress well. To name a few of the headlines in the month, Wegovy prescription data in the US was strong, the company announced plans for an additional fill and finish site which continues to build significant capacity growth from 2026 and Wegovy was approved as an obesity treatment in China.

 

A position in Linde began to recover from recent weakness following Q1 2024 results which were solid yet seemed to disappoint the market with guidance which was only raised at the low end of the company’s range. We think management’s conservatism at Q1 is understandable and expect Linde to continue showing strong execution and proving their ability to grow earnings.

 

Elsewhere, avoiding European banks such as BNP and Banco Santander was helpful. The sector was dragged down by political volatility: BNP was particularly impacted by the French elections, whilst Santander was impacted by concerns around Brazil as well as an unexpected slowdown of rate cuts.

 

Shares in Chemometec fell in the month despite limited company specific updates, as the recovery in life sciences is yet to be seen. Having recently met with management we remain encouraged by the pivot in their strategy to one we believe is quite promising from a commercial perspective.

 

The portfolio’s holding in Kingspan detracted with shares selling off on the back of French political noise. The company generates close to 15% of revenues in France, but from our read of RN party policies there is nothing that would really impact the group negatively and thus the share price move (c. 10% down in the month) may be overdone. General construction weakness and softer commentary on recovery, with projects being delayed across the industry, also weighed on sentiment.

 

Not holding a few of the reference index large defensive assets, such as SAP, Roche and Novartis, detracted from relative returns as their shares outperformed the falling market.

 

 

Outlook

 

As economic momentum gathers pace and company guidance strikes a more optimistic tone, Europe has come into the spotlight. The European Central Bank’s decision to cut rates was taken positively, although the jury remains out on the speed rates fall from here. Whilst this rate change is positive for asset class sentiment, operationally we see limited impact on companies.

 

Rising political discontent, however, has been a thorn in the region’s side. Geopolitical tensions around tariffs and surprise elections in key economies such as the UK and France have added a degree of uncertainty. We take confidence in the changed regulatory landscape for banks in helping manage perceived contagion risk that could arise from potentially weaker fiscal positions and believe the negative impact of tariffs would only be meaningful for a small group of companies. Whilst uncertainty on policy outcomes remains, we believe the growth impact is likely limited in the near-term and economics should continue their positive inflection.

 

Long-term structural trends and large amounts of fiscal spending via the Recovery fund, Green Deal and the REPowerEU plan in Europe can also drive demand for years to come, for example in areas such as infrastructure, automation, innovation in medicines, the shift to electric vehicles, digitization, or decarbonisation. Valuations are attractive versus history and especially versus US equities. Overall, evidence of a resilient consumer, healthy corporate sector and decent outlooks underpinned by green stimulus should be supportive for the companies held in the portfolio.

 

 

17 July 2024

  

ENDS

 

Latest information is available by typing www.blackrock.com/uk/brge 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.

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