REG-BlackRock Greater Europe Investment Trust Plc: Portfolio Update

Blackrock Greater Europe Investment TrustAnnouncement

19/02/2025 16:45

The information contained in this release was correct as at 31 January 2025.
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 January 2025 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)  9.8%       8.7%          7.6%      13.7%        804.5%              
 Share price                  10.3%      9.9%          7.0%      6.0%         755.7%              
 FTSE World Europe ex UK      8.2%       6.0%          11.1%     26.5%        474.5%              

Sources: BlackRock and Datastream
 

 

At month end

 Net asset value (capital only):      643.69p     
 Net asset value (including income):  643.70p     
 Share price:                         601.00p     
 Discount to NAV (including income):  6.6%        
 Net gearing:                         9.7%        
 Net yield 1 :                        1.2%        
 Total assets (including income):     £627.9m     
 Ordinary shares in issue 2 :         97,540,476  
 Ongoing charges 3 :                  0.95%       

 

1  Based on an interim dividend of 1.75p per share and final dividend of
5.25p per share for the year ended 31 August 2024.

2  Excluding 20,388,462 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 2024.

 

                          
 Sector Analysis          Total Assets (%)  
 Industrials              27.8              
 Consumer Discretionary   23.9              
 Technology               16.1              
 Health Care              14.1              
 Financials               10.2              
 Basic Materials          6.8               
 Real Estate              1.8               
 Net Current Liabilities  -0.7              
                          -----             
                          100.0             
                          =====             
                                            
                                            
                                            
                                            
                                            
                                              
 Country Analysis         Total Assets (%)  
 France                   20.6              
 Netherlands              19.4              
 Switzerland              17.9              
 Denmark                  9.0               
 United Kingdom           6.2               
 Sweden                   5.6               
 Germany                  5.3               
 Ireland                  5.2               
 Italy                    4.0               
 United States            3.7               
 Belgium                  2.0               
 Finland                  1.8               
 Net Current Liabilities  -0.7              
                          -----             
                          100.0             
                          =====             
                                            

 


 

 Top 10 holdings                  Country         Fund %  
 Novo Nordisk                     Denmark         6.7     
 RELX                             United Kingdom  6.1     
 Safran                           France          5.8     
 ASML                             Netherlands     5.5     
 Hermès                           France          4.9     
 Schneider Electric               France          4.9     
 Partners Group                   Switzerland     4.5     
 Ferrari                          Italy           4.0     
 Compagnie Financière Richemont   Switzerland     3.8     
 Allied Irish Banks (AIB)         Ireland         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 9.8% and the share price by
10.3%. For reference, the FTSE World Europe ex UK Index returned 8.2% during
the period.

 

European ex UK markets delivered a strong start to the year. This was driven
by a number of strong company results and improving sentiment towards the
region. Additionally, the first few days of President Trump's term have, so
far, seen fewer tariff announcements than anticipated – although this
narrative looks to be changing in the early days of February. Strong market
returns are also attributed to a recovery from a weaker H2 2024, with consumer
stocks rebounding following better data towards the end of Q4 and into Q1,
along with some signs of stabilisation from China.

 

Whilst we are still at the early stages of Q4 earnings in Europe, the earnings
season has, so far, fared better than expected. We would note expectations had
been lowered through the year, but that we are now seeing encouraging signs
from luxury, banks and life sciences reports coming through.

 

Towards the end of January, global markets were shaken by news that Chinese
company DeepSeek had trained an Artificial Intelligence (AI) model comparable
to those developed in Silicon Valley, but at a fraction of the cost, and were
offering the technology as open source. While perceived as a shock by markets,
the cost improvement was less of a surprise for some of the leaders in the
space, who view the decreases in cost as ‘on trend’ with the historical
cost curve decrease. What is clear is that this industry is developing very
quickly and adoption could follow suit. There are uncertainties that remain
around the impact to long-term capital expenditure (capex) plans and the
return on this investment, a debate that has been persistent in the market
since last year. In the meantime, the hyperscalers have since confirmed strong
capex plans for 2025, as the ultimate goal towards Artificial General
Intelligence remains a key focus.

 

The Company outperformed its reference index during the month, driven by both
stock selection and sector allocation. In sector terms, the Company’s lower
allocation to defensive sectors such as consumer staples was positive for
returns as the market moved up strongly.  An overweight to both consumer
discretionary and technology was also positive. However, a lower exposure to
financials detracted.

 

Strong contribution came from a number of luxury stocks. Richemont was
amongst the largest contributors to returns in January, posting strong results
with sales increasing by 10%, reaching a record of EUR6.2bn. The strong
performance was fuelled by accelerated US spending across all categories and
clientele. In Europe, growth was more brand-specific due to efforts to improve
visibility and access such as expanding Van Cleef & Arpels into more markets.
Despite weaker sales in Asia-Pacific, the lack of further deterioration in
China was also seen as a positive. Hermès and LVMH were also amongst the best
performers, as the sector continued to perform better on improving data from
the US and signs of stabilisation in China.

 

Within industrials, strong contribution came from engine-maker Safran. Shares
had been weak following the capital markets day in December due to some
disappointment around the growth targets, particularly in aftermarket.
However, since then, there has been strong results and guidance from peers
which suggest that those targets are conservative and that overall demand
remains strong. Shares in RELX also performed well as the company is seen as
an ‘AI winner’, with a path to more cost-effective AI beginning to look
clearer.

 

Within financials, private equity firm Partners Group reported solid results
for the second half of 2024. The firm reported 5% year-on-year growth in
assets under management, reaching USD149bn. Management fees increased by 4%,
reflecting sustained demand for bespoke client solutions. The company also
maintained a robust exit pipeline, anticipating an increase in performance
fees as the exit environment improves.

 

Following the DeepSeek newsflow, the overall contribution from the technology
sector was mixed. Nemetschek was the top performer over the month, reporting a
strong set of financial results, driven by significant revenue growth and
improved profitability. The company's performance beat expectations, with
one-third of the beat attributed to one-off license changes and two-thirds
driven by higher-quality subscription growth. Nemetschek is expected to
surpass its conservative EBITDA guidance of 28-30%, with mid-teens organic
growth guidance likely achievable at 19%. Over the next couple of years, the
company anticipates high single-digit upgrades to revenue and low teens
upgrades to EBITDA. 

 

On the negative side, Be Semiconductor (BESI) and ASMI detracted during the
month as, following the DeepSeek newsflow, investors questioned the potential
shift in market dynamics and reduced demand for their products. Similarly,
shares in Schneider Electric experienced weakness due to their exposure to
data centre growth.

 

Outlook

The underlying economic conditions in Europe remain solid, with both consumers
and corporations in healthy financial positions. The disinflation process is
progressing, with the European Central Bank projecting headline inflation to
average 2.1% in 2025 and 1.9% in 2026. Globally, rate-cutting cycles have
begun, with the Federal Reserve following Europe's lead.

 

After a long hiatus, capex has returned, supporting a lot of cyclical
businesses and potentially driving higher earnings over a multi-year period,
which has driven us to maintain our cyclical exposure. There are significant
secular opportunities in areas such as the energy transition and advancements
in AI.

 

The luxury sector, having been through two years of normalisation, could
potentially start to see improvements in 2025, as resolving US election
uncertainty has further improved the economic backdrop in the US. However, it
remains crucial to be selective in Europe – defensive exposures are more
attractive in the industrials sector, while the consumer staples sector
remains very weak.

 

Additionally, the European market composition has structurally improved,
becoming a higher quality market while valuations are at a record-wide
discount relative to the US.

 

Investor sentiment toward Europe has been subdued, with many favouring an
overweight allocation to U.S. equities, which have performed exceptionally
well. Nevertheless, Europe presents compelling valuation opportunities.
Structural reforms, the possibility of a new government in Germany and
economic stimulus from China could help shift sentiment positively. Germany,
in particular, is grappling with substantial economic challenges and is in
need of significant reform. A market-friendly coalition government could
unlock long-delayed investments, making the upcoming February election a key
event to watch. That said, our investment approach prioritises company
specific opportunities and management teams over a country view or political
developments. Our focus lies on industries with robust structural drivers, as
these have a more profound impact on long-term outcomes than country-specific
factors. A strong U.S. economy, positive real wage growth in Europe, and
potential stimulus measures in China could create a supportive backdrop for
Europe’s globally oriented companies.

 

ENDS

 

19 February 2025

 

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.

 

 Release (https://mb.cision.com/Main/22396/4108406/3274752.pdf)  



Copyright (c) 2025 PR Newswire Association,LLC. All Rights Reserved