Last checked at 26 Jan 2009 11:32
BLACKROCK GREATER EUROPE INVESTMENT TRUST plcAll information is at 31 December 2008 and unaudited.
Performance at month end with net income reinvested
One Three One Since Month Months Year Launch (20 Sep 04)Net asset value 13.5% 0.2% -24.1% 53.7%Share price 18.9% 4.2% -24.8% 45.5%
FTSE World Europe ex UK 16.6% -2.5% -24.0% 45.3% Sources: BlackRock and Datastream
At month end Net asset value (capital only): 144.28p
Net asset value (including income): 144.66p* * includes net revenue of 0.38p
Share price: 136.75p Discount to NAV (capital only): 5.2% Discount to NAV (including income): 5.5% Gearing: Nil Net yield: 2.2% Total assets: £154.53m**Ordinary shares in issue: 106,820,690^ ** includes current year revenue.
^ excluding 5,568,268 shares held in treasury.
Sector Analysis Total Assets Index (%) Country Analysis Total Assets (%) (%) Financials 21.4 22.9 Switzerland 23.4 Healthcare 15.3 9.9 France 23.1 Industrials 10.5 12.1 Germany 11.4 Consumer Services 10.1 5.5 Netherlands 9.8 Telecommunications 9.6 8.3 Spain 9.6 Utilities 9.4 9.4 Italy 7.4 Consumer Goods 6.9 14.7 Emerging Europe 6.0 Oil & Gas 6.5 7.2 Russia 1.7 Basic Materials 2.4 6.3 Portugal 1.6 Technology 0.4 3.7 Ireland 1.6 Other Investments 6.0 Greece 1.3 Net current assets 1.5 Belgium 1.1 ----- ----- Israel 0.4 100.0 100.0 Poland 0.1 ===== ===== Net current assets 1.5 ----- 100.0 ===== Ten Largest Equity Investments Company Country of Risk Banco Santander Central Hispano Spain BlackRock Eurasian Frontiers Hedge Fund Emerging Europe E.ON Germany Koninklijke Netherlands Nestl© Switzerland Novartis Switzerland Sanofi-Aventis France Telefonica Spain Vivendi Universal France Zurich Financial Services Switzerland
Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:
December saw a global rally in equities markets, despite macroeconomic data that disappointed already depressed expectations. Central banks continued to be proactive in their attempts to limit the damage from the global downturn by implementing further interest rate cuts whilst increasing the size and scope of their respective fiscal packages. In Europe the ECB was less aggressive with its monetary response than the U.S. Federal Reserve but still cut rates by 75bps to 2.5%. Against this backdrop, the FTSE World Europe ex UK Index returned 16.6% (in Sterling terms).
Emerging Europe underperformed developed European markets as questions were raised about the ability of some nations to service large foreign exchange liabilities in the face of diminished foreign capital inflows and several countries agreed to terms for IMF bailout packages. Against this background, the MSCI Emerging Europe Index posted a gain of 4% in Sterling terms.
During the month the Company's NAV returned 13.5%, underperforming the reference index. The contribution from the Emerging Europe region was marginally negative with Poland, Israel and the BlackRock Eurasian Frontiers Hedge Fund detracting. Within Developed Europe stock selection was also negative with Switzerland, France and the Netherlands being the largest detractors. The Company was not geared as at 31 December 2008, and its performance was hindered by a cash position in a rising market.
The Company benefited from its holding in Greek gaming company OPAP, which performed well after recent results demonstrated that the gaming franchise was more resilient than expected. Elsewhere, companies with defensive characteristics such as French media conglomerate Vivendi, Italian defence contractor Finmeccanica and French pharmaceutical company Sanofi-Aventis made a positive contribution to performance.
The stocks to detract were mainly found in the financial sector and included French bank, BNP Paribas, and Swiss Investment bank, Credit Suisse. Other stocks to reduce in value included German logistics company TNT and Polish broker Dom Maklerski. At the sector level the Company benefited from being overweight in consumer services and underweight in technology. However, sector allocation was negative overall and the Company's return was particularly hampered by an underweight exposure to the financials sector, an underweight industrials holding, and an overweight position in telecommunications.
During the month the Company increased its exposure to the material and industrial sectors through the purchase of a holding in Russian Norlisk Nickel and adding to existing positions. Within the utility sector, the Company purchased Portuguese utility EDP. These additions were largely funded by reducing our cash position which had been increased during the falling markets of the previous month.
Exposure to Emerging Europe increased marginally during the month from 7.9% to finish at 8.4%. Within the region, the BlackRock Eurasian Frontiers Hedge Fund continued to account for the majority of the emerging market weight providing diversified exposure to the region. Net market exposure was reduced during the month from 93% to 98%.
On a sector view, the Company currently has a bias to financials. However, it still retains an underweight stance relative to the reference benchmark, especially in banks, diversified financials and real estate, with a small overweight in insurance. Other key sector weights included healthcare, telecoms and consumer staples. The Company has limited exposure to the information technology and materials sectors.
2009 is likely to be marked by further declines in economic activity, higher unemployment and significant earnings declines. Markets enjoyed a rally in December and began the year with some optimism, assisted in part by further announcements of various Government fiscal stimulus packages but it is likely that any rally will be tested in the coming months as negative news unfolds. However, increasingly attractive valuations, coupled with cash on the sidelines and further fiscal and monetary support provide a positive starting point for equities in 2009. At the portfolio level, we currently favour companies with strong franchises, reliable earnings, strong balance sheets (high cash, low debt) and experienced management teams. In our view, these companies have the scope to emerge from the downturn in a much stronger position as true market leaders.
Latest information is available by typing www.blackrock.co.uk/its on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal).
26 January 2009
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