General risks: The value of investments, and any income generated from them, can fall as well as rise. Where charges are taken from capital, this may constrain future growth. Past performance is not a reliable indicator of future results. If any currency differs from the investor's home currency, returns may increase or decrease as a result of currency fluctuations. Investment objectives and performance targets may not necessarily be achieved, losses may be made.
Read more about our equity and bond funds focused on the growth opportunity in China
Despite the introduction of Stock Connect and other initiatives to increase efficiency, the premium between H-shares and A-shares remains at about 20%-45%. This creates arbitrage opportunities.
A/H dual listing premia
Source: Bloomberg, 15.11.17. This is not a buy, sell or hold recommendation for any particular security.
The Fund aims to provide long-term capital growth primarily through investment in equities or equity-related securities issued by Chinese companies listed anywhere in the world.
*Performance target will not necessarily be achieved, losses may be made.
The above guidelines are internal and subject to change without prior notice.
Geographic / Sector: Investments may be primarily concentrated in specific countries, geographical regions and/or industry sectors. This may mean the value of the Fund may decrease whilst more broadly invested funds might grow.
Currency exchange: Changes in the relative values of different currencies may adversely affect the value of the Fund’s investments and any related income.
Developing market: Some of the countries in which the Fund invests may have less developed legal, political, economic and/or other systems. These markets carry a higher risk of financial loss than those in countries generally regarded as being more developed.
Investing in China: Investment in mainland China may involve a higher risk of financial loss when compared with countries generally regarded as being more developed.
Derivatives: The use of derivatives is not intended to increase the overall level of risk. However, the use of derivatives may still lead to large changes in value and includes the potential for large financial loss.
Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. bankruptcy), the owners of their equity rank last in terms of any financial payment from that company.
The yields of onshore (CNY) and offshore (CNH) China government bonds are generally higher than those of large global peers
CNH 5yr Govt Bond Yields & CNY Onshore Govt Bond versus DM Govt Bond Yields (%)
Source: JPM, Bloomberg, 28 February 2018. Comprising the JPM GBI Global Index are bonds issued by the governments of Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, Sweden, United Kingdom and United States of America.
Allocating to Chinese fixed income can help diversify overall portfolio returns because China’s interest rate movements are predominantly determined by domestic factors
|Offshore CNH Bonds||Offshore USD China Bonds||Global DM Bonds||Global DM Equities||Global EM Local Bonds||Global EM USD Bonds||Global EM Equities|
|Onshore CNY Bonds||-0.07||-0.22||0.19||-0.22||-0.07||-0.18||0.22|
|Offshore CNH Bonds||0.47||0.28||0.45||0.43||0.39||0.58|
|Offshore USD China Bonds||0.29||0.60||0.67||0.81||0.69|
|Global DM Bonds||0.19||0.56||0.48||0.27|
|Global DM Equities||0.71||0.65||0.88|
|Global EM Local Bonds||0.82||0.81|
|Global EM USD Bonds||0.74|
Source: Bloomberg, December 2017. Onshore CNY Bonds: JP Morgan Asia Diversified Broad China Index TR; Offshore CNH Bonds: MarkitiBoxxAsia Local Bond Index China Offshore TR Index Unhedged; Offshore USD China Bonds: JP Morgan Asia Credit Index China TR; Global DM Bonds: JP Morgan Government Bond Index Global Unhedged USD; Global DM Equities: MSCI World Index; Global EM Local Bonds: JP Morgan GBI-EM Global Diversified Composite Unhedged USD; Global EM USD Bonds: JP Morgan EMBI Global Diversified Composite; Global EM Equities: MSCI Emerging Markets Index.
* Correlations calculated based on monthly returns data, from 2008 to 2017.
Gain exposure to the world’s largest developing bond market that is under-represented and set to increasingly feature in global fixed income allocations. Bloomberg Barclays announced launch of the Global Aggregate + China Index in March 2017, with China’s projected weight at 5.9%. Citi also included China in its Emerging Markets bond indices in March 2017.
General government total debt securities
Source: Bank for International Settlements (BIS), June 2017
All information is as at 31.03.18 unless otherwise stated.