BlackRock Greater Europe Investment Trust Plc - Portfolio Update
The information contained in this release was correct as at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html .
All information is at
Performance at month end with net income reinvested
One Three One Three Launch
Month Months Year Years (20 Sep 04)
Net asset value (undiluted) 2.0% -1.0% 16.4% -1.6% 797.9%
Share price -1.6% -3.5% 15.5% -10.0% 747.3%
FTSE World Europe ex UK 1.5% -0.1% 15.8% 18.7% 461.2%
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): 639.14p Net asset value (including income): 644.81p Share price: 601.00p Discount to NAV (including income): 6.8%Net Gearing : 8.0% Net yield1: 1.1% Total assets (including income): £640.5m Ordinary shares in issue2: 99,332,161 Ongoing charges3: 0.98%
1
Based on a final dividend of 5.00p per share for the year ended
2
Excluding 18,596,777 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
Country Analysis Total Assets (%)
France 20.9
Sector Analysis Total Assets (%) Netherlands 20.5
Industrials 26.6 Switzerland 17.8
Consumer Discretionary 23.0 Denmark 10.6
Technology 18.4 United Kingdom 6.5
Health Care 15.5 Ireland 6.0
Financials 8.9 Sweden 5.3
Basic Materials 6.9 Italy 4.4
Consumer Staples 0.9 United States 3.8
Net Current -0.2 Germany 2.1
Liabilities
Belgium 1.9
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Finland 0.4
100.0
Net Current Liabilities -0.2
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100.0
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Top 10 holdings Country Fund % Novo Nordisk Denmark 8.9 ASML Netherlands 7.2 RELX United Kingdom 6.5 LVMH France 5.3 Ferrari Italy 4.4 Hermès France 4.1 Safran France 3.9 Schneider Electric France 3.9 ASM International Netherlands 3.8 Linde United States 3.8
Commenting on the markets,
During the month, the Company’s Net Asset Value (NAV) rose by 2.0% and the share price declined by 1.6%. For reference, the FTSE World Europe ex
August was marked by significant market volatility, primarily triggered by a weak US jobs report that raised concerns about a potential downturn in the US economy. This was compounded by the unwinding of the yen carry trade, leading to a substantial decline in Japanese markets, spreading concerns globally. However, the situation quickly stabilised as better economic data and a dovish message from Fed Chair Powell at Jackson Hole reassured investors.
During the month, we saw a continued rotation out of cyclical stocks into defensive ones which we had started to witness in the prior month, as investors expressed a preference for safer assets amidst the uncertainty. Real estate, communication services, healthcare and utilities were the strongest performers while technology shares fell the most.
Despite the turbulence, European markets managed to hold up well. The Company outperformed its reference benchmark, largely driven by strong stock selection.
In sector terms, the portfolio’s zero exposure to energy aided returns, as did a higher allocation to consumer discretionary. The higher allocation to cyclical sectors such as IT hurt relative performance. An overweight to industrials was also negative although offset by accurate stock selection. Lower weights in defensive sectors including telecoms and consumer staples were negative during August.
Ferrari was the top performer during the month thanks to very strong Q2 earnings with revenues 7% and EBIT 9% ahead of expectations, driven by both product mix and higher than expected personalisation revenues. The average selling price increased by 14% to
IMCD, a global distributor of specialty chemicals and ingredients, started to recover from its previous underperformance after delivering better-than-expected results. The company achieved a slight beat on gross profit and EBITA, as it enters a period of normalised comparables, driven by M&A and a gradual recovery in the
Adyen shares also gained after an H1 2024 report with results in line with consensus estimates across metrics. Revenue growth of 23.6% came in above consensus expectations which were looking for 21-23% organic sales growth, which helped to alleviate much of the bear case concerns. Management also spoke to the positive impact from hires made in 2023 and a longer client pipeline adding to visibility.
Similar to what we observed in July, the technology sector was the largest detractor in August, with ASML and ASMi among the most affected. Despite semiconductor companies delivering robust Q2 earnings, shares were impacted by concerns over the return on AI investments, potentially peaking hyperscaler capex, and possible restrictions on selling to
Elsewhere in the sector, a holding in STMicro dragged on relative returns following cuts during their Q2 update in July, bringing down full year sales guidance as well as 2024 and 2025 EPS. With our thesis of an improved business with greater margin resiliency through cycle challenged by the update, we are reassessing the position.
Within healthcare, owning Lonza detracted with shares down marginally in August after a >20% gain the previous month on the back of positive first half results. We remain pleased seeing the acceleration in sales momentum and profitability beat come through following the earlier qualitative update, leading to increased confidence in managements’ execution and communication.
Finally, RELX experienced some weakness in August after having shown strong performance earlier in the year. Although there was no specific stock-related news, it is likely that the shares were volatile as RELX is considered an AI winner, and profit taking in this segment was broad based during the course of the month.
Outlook
As economic momentum gathers pace and company guidance strikes a more optimistic tone,
Rising political discontent, however, has been a thorn in the region’s side. Geopolitical tensions around tariffs and elections as well as weaker macro data in the US and
Long-term structural trends and large amounts of fiscal spending via the Recovery fund, Green Deal and the REPowerEU plan in
ENDS
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