REG-BlackRock Grtr Eur: Portfolio Update

Blackrock Greater Europe Investment TrustAnnouncement

15/12/2022 14:45

The information contained in this release was correct as at 30 November 2022.
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 November 2022 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)        8.6%          7.0%    -24.5%        26.8%              592.1% 
 Share price                        9.2%          6.4%    -30.0%        26.0%              566.6% 
 FTSE World Europe ex UK            8.0%          7.2%     -2.9%        20.6%              348.4% 

Sources: BlackRock and Datastream
 

At month end

 Net asset value (capital only):           504.24p 
 Net asset value (including income):       504.30p 
 Share price:                              480.25p 
 Discount to NAV (including income):          4.8% 
 Net gearing:                                 0.4% 
 Net yield (1):                               1.4% 
 Total assets (including income):          £509.3m 
 Ordinary shares in issue (2):         101,000,161 
 Ongoing charges (3):                        0.98% 

1  Based on an interim dividend of 1.75p per share and a final dividend of
4.85p per share for the year ended 31 August 2022.
2  Excluding 16,928,777 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 2022.

                          
 Sector Analysis           Total Assets (%) 
 Industrials                           22.9 
 Health Care                           21.5 
 Consumer Discretionary                20.8 
 Technology                            15.2 
 Financials                            12.0 
 Consumer Staples                       4.8 
 Basic Materials                        3.2 
 Net Current Liabilities               -0.4 
                                      ----- 
                                      100.0 
                                      ===== 
                                              
 Country Analysis          Total Assets (%) 
 Denmark                               18.6 
 Switzerland                           17.8 
 France                                16.9 
 Netherlands                           16.3 
 Italy                                  7.1 
 United Kingdom                         6.7 
 Sweden                                 5.9 
 Belgium                                2.8 
 Spain                                  2.2 
 Greece                                 2.0 
 Poland                                 1.9 
 Germany                                1.2 
 Ireland                                1.0 
 Net Current Liabilities               -0.4 
                                      ----- 
                                      100.0 
                                      ===== 
                                            

   

 Top 10 holdings        Country          Fund % 
 Novo Nordisk           Denmark             8.8 
 LVMH Moët Hennessy     France              8.1 
 ASML                   Netherlands         6.7 
 RELX                   United Kingdom      5.7 
 Lonza Group            Switzerland         5.0 
 DSV Panalpina          Denmark             4.4 
 Hermès International   France              4.0 
 Sika                   Switzerland         3.7 
 Safran                 France              3.2 
 IMCD                   Netherlands         3.2 
                                                

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

During the month, the Company’s NAV rose by 8.6% and the share price by
9.2%. For reference, the FTSE World Europe ex UK Index returned 8.0% during
the period.

European ex UK equities continued to rally during November.
Lower-than-expected inflation numbers have led to expectations for a slower
pace of interest rate hikes. Yet we hear from central bank speakers that
tightening still has some way to go. Nevertheless, risk assets bounced during
the month.

Europe has outperformed US equities in recent months on the back of more
optimism around gas storage levels in Europe, a slightly weakening US dollar
and lack of big tech companies such as Google and Microsoft that have shown
softness in recent weeks. The rally was led by cyclicals and has been funded
by profit taking in defensive parts of the market. Tech, energy and consumer
discretionary delivered the strongest returns, while telecoms and health care
lagged the strong market rally. 

During the month, the Company outperformed its reference index, driven by both
strong stock selection and sector allocation.

In sector terms, a higher allocation to the technology sector, in particular
to the semiconductor industry which outperformed software, was beneficial. The
Company’s lower weight to defensive areas such as telecoms, consumer staples
and real estate aided relative returns. Our higher allocation to health care
detracted, although this was significantly offset by strong stock selection.
The underweight exposure to energy was negative during the month.

Positive performance was driven by the Company’s cyclical assets, namely
within the luxury and semiconductor sectors. Our large position in LVMH was
amongst the strongest contributors to relative returns. Hopes around a
potential softening of China’s zero Covid policy helped shares in
China-exposed stocks such as luxury. 

The semiconductor industry benefited from the cyclical tailwind during
November and shares in ASML, ASMi and Besi contributed positively. On top of
that, ASML, a leading supplier in the industry, held a positive Capital
Markets Day, setting confident new targets for 2025. Despite the macroeconomic
uncertainties in the near term, ASML seems to be somewhat insulated given
18-24 months of tool lead times and 2 years of order backlog.

ASMi also recovered post weakness in the previous month. Following the
announcement of US export restrictions on China, the chipmaker had initially
anticipated the regulations could impact 40% of sales to China. Having done
extensive internal reviews, ASMi now estimate a 15-25% drop which reassured
markets during November.

Not owning shares in Roche was the largest single positive contributor to
relative performance during the month. Shares in the Swiss pharmaceuticals
company came under pressure following the failed trial for their Alzheimer
drug, Gantenerumab, seeking to provide preventive treatment for patients with
early signs of the disease.

Elsewhere within health care, the Company’s position in Lonza weighed on
performance. Shares were impacted when a US based contract development and
manufacturing organization peer released a downgrade to their fiscal year (FY)
guidance based on macro deterioration and Covid related business slow down. We
believe the read across to Lonza was unwarranted, with shares overacting,
given the company specific nature driving the peer downgrade.

Negative contribution also came from shares in RELX which plunged on mounting
investor concerns over the company’s revenue exposure to a weakening US
dollar. Also, in the industrials sector, not owning Siemens contributed
negatively to relative performance. The company reported strong FY22 results
showing no signs of a slowdown yet, as they continue to work through their
order backlog.

Other detractors included not owning cyclical stocks with China exposure
including Prosus, Infineon, Richemont and Kering.

At the end of the period, the Company had a higher allocation than the
reference index towards consumer discretionary, technology, health care and
industrials.

The Company had an underweight allocation to financials, energy, consumer
staples, utilities, telecoms, materials and real estate.

Outlook

2022 has been challenging, with concerns over the economic implications of the
Russian invasion of Ukraine, rising interest rates and continued supply chain
disruptions weighing on equity returns.

We are incrementally more cautious on the environment but see opportunities
for attractive returns in select areas. Large amounts of fiscal spending via
the Recovery Fund, Green Deal and the REPowerEU plan in Europe can drive
demand for years to come, for example in areas such as infrastructure,
automation, the shift to electric vehicles, digitisation, renewables or the
refurbishment of building stock. We believe the portfolio is well aligned to
many of these spending streams.

We continue to stay close to our companies which allows us to understand the
environment they are operating in. We expect greater dispersion between sector
and stock outcomes and with that a need for greater selectivity. In our view
this will favour well-managed, well-organised businesses with an element of
pricing power and we believe that holding these businesses will benefit our
shareholders over the medium to long term.

15 December 2022

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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