Last checked at 28 Mar 2008 16:00
MERRILL LYNCH GREATER EUROPE INVESTMENT TRUST plc
All information is at 29 February 2008 and unaudited.
Performance at month end with net income reinvested
One Three One Since Launch Month Months Year (20Sep04)Net asset value 0.5% -9.3% 0.5% 78.8% Share price 1.5% -6.8% 1.1% 74.0% FTSE World Europe ex UK 2.2% -7.3% 4.8% 73.8%
Sources: BlackRock and Datastream
At month end Net asset value (capital only): 172.18pNet asset value (including income): 172.30p*Share price: 167.50p*Includes net revenue of 0.12p Discount to NAV (capital only): 2.7%Discount to NAV (including income): 2.8%Gearing: 6.4%Net yield: 1.4%Total assets: ‚£210.9mOrdinary shares in issue: 115,117,791BenchmarkSector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%) Financials 26.6 27.6 Germany 22.0Health Care 11.1 6.9 Switzerland 12.6Telecommunications 10.9 6.9 France 11.9Basic Materials 9.2 7.2 Italy 10.4Oil & Gas 9.1 6.6 Netherlands 8.9Utilities 7.9 8.6 Spain 7.6Consumer Goods 7.5 13.9 Finland 4.9Technology 6.2 4.2 Russia 4.4Industrials 5.9 13.0 Emerging Europe 3.8Consumer Services 3.5 5.1 Turkey 3.5Other Investments 3.9 - Belgium 2.2Net current liabilities (1.8) Poland 2.1 Greece 1.8 Norway 1.6 Austria 1.3 Luxembourg 1.1 USA 1.0 Israel 0.6 UK 0.1 Net current liabilities (1.8) ----- ----- ----- 100.0 100.0 100.0 ===== ===== =====Ten Largest Equity Investments Company Country of Risk Allianz Germany Banco Santander Spain Bayer Germany BlackRock Eurasian Frontiers Hedge Fund Emerging Europe ENI Italy Intesa Sanpaolo Italy Nokia Finland Novartis Switzerland Roche Switzerland Siemens Germany
Commenting on the markets, James Macmillan, representing the Investment Manager noted:
European equity markets stabilised in February with the FTSE World Europe ex UK Index (NDR) posting a return of 2.2% in Sterling terms. Strongest performance came from the basic resources sectors as commodity prices continued to rise, whilst weak performance came from Telecoms, Media and Technology stocks. The European Central Bank (ECB) retained its hawkish stance after Purchasing Manager's Index (PMI) data showed manufacturing activity decreasing but prices at the factory gate rising at their fastest rate in nearly a year. The Consumer Price Index (CPI) rose to a record 3.2% in February, making it very unlikely the ECB will cut rates soon. Emerging Europe outperformed the developed European markets with the MSCI Emerging Europe Index posting a gain of 6.1% through February in Sterling terms as the economies benefited from strong commodity and energy prices.
The Company's NAV returned +0.5% underperforming the reference index. The contribution from the Emerging Europe region was marginally negative, with any benefit to the Company from its exposure in Poland failing to offset the falls in the BlackRock Eurasian Frontiers Hedge Fund, Russia and Turkey. The Company's performance was boosted by positive gearing in a rising market.
During the month, the Company benefited from its exposure to Consumer Discretionary and Health Care stocks with Retailer, Praktiker; Auto company, Daimler; and Health Care stocks, Eczacibasi Ilac Sanayi ve Ticaret, Roche and Fresenius all delivering strong performance. Several Materials companies significantly outperformed during February on the back of strong commodity prices, notably ArcelorMittal and Norsk Hydro. Other positive contributors included selective investments in Financials and Technology.
Broader exposure to the Financials sector, particularly Banks, was a drag on performance over the month. Credit Suisse was the Company's biggest faller within the sector, as it sold off on the back of further unexpected writedowns. In addition, investments in Telecoms (which fell out of favour on concerns that earnings would fail to meet expectations), Industrials (as investors continue to avoid cyclical sectors) and Utilities all contributed negatively to performance. On a name specific basis within these sectors, key underperformers included Telecom stocks, Telekom Austria, Telecom Italia and Hellenic Telecoms; Utility company, EDF; and Industrial company, Koza Davetiyeleri Imalat Ithalat ve Ihracat.
During the month, the Company reduced its holdings in the Banks, Electricity and Autos sectors. The proceeds were used to increase holdings in the Non-life Insurance sector, through the purchase of Allianz; Telecoms, through the purchase of Telefonica and Kon Kpn; and Oil & Gas Producers through the purchase of Polski Kon.
The Company continues to have a bias towards Health Care, Materials and Technology stocks and has now increased its exposure to Telecoms. The Company has reduced its exposure to Financials. Exposure to Emerging Europe rose during the month to finish at 14.4%, with the largest country exposures being Turkey and Russia, along with the BlackRock Eurasian Frontiers Hedge Fund which provides diversified exposure to the region. During the month the Company increased its net market exposure to 106.4%.
We remain positive on the prospects for European and Emerging European equities. Global economic growth is clearly moderating in response to a weaker U.S. economy and the impact of higher credit costs, but central banks are determined to ensure stability in the world financial system by applying the appropriate monetary measures. At current prices, stocks carry attractive valuations and we believe will begin to respond positively once markets look forward to a resumption of stronger growth.
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).
28 March 2008
MERRILL LYNCH GREATER EUROPE INVESTMENT TRUST PLC