Attached files
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| 8-K - CHINA FUND INC | fp0006532_8k.htm |
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JAN 31, 2013
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Monthly Insight
The China Fund, Inc. (CHN)
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Investment Objective
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The investment objective of the Fund is to achieve long term capital appreciation. The Fund seeks to achieve its objective through investment in the equity securities of companies and other entities with significant assets, investments, production activities, trading or other business interests in China or which derive a significant part of their revenue from China.
The Fund has an operating policy that the Fund will invest at least 80% of its assets in China companies. For this purpose, ‘China companies’ are (i) companies for which the principal securities trading market is in China; (ii) companies for which the principal securities trading market is outside of China or in companies organized outside of China, that in both cases derive at least 50% of their revenues from goods or services sold or produced, or have a least 50% of their assets in China; or (iii) companies organized in China. Under the policy, China will mean the People’s Republic of China, including Hong Kong, and Taiwan. The Fund will provide its stockholders with at least 60 days’ prior notice of any change to this policy.
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Performance Overview
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Performance History
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1 month
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3 months
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YTD
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1 Year
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3 Years
(p.a.)
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5 Years
(p.a.)
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10 Years
(p.a.)
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Since Inception
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NAV (%)
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4.65
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11.30
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4.65
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13.05
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4.96
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4.01
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18.10
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10.95
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Market price (%)
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4.95
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18.67
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4.95
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17.86
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6.42
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6.43
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18.99
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10.24
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Benchmark (%)
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3.44
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10.18
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3.44
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15.35
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8.37
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3.41
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13.02
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N/A
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Performance History
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2012
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2011
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2010
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2009
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2008
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2007
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2006
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2005
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NAV (%)
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12.07
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-24.37
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27.25
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72.82
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-46.95
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86.20
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57.10
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6.09
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Market price (%)
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20.46
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-27.51
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23.60
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72.19
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-40.65
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50.24
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65.67
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-21.51
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Benchmark (%)
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22.65
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-18.36
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13.60
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67.12
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-49.37
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37.97
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39.50
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10.27
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Source : State Street Bank and Trust Company. Source for index data: MSCI as at January 31, 2013.
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Portfolio Analysis
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Source : State Street Bank and Trust Company as at January 31, 2013.
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* China includes A-shares (5.4%), A-share equity linked securities (8.1%),
B-shares (0.0%), H-shares (14.1%) and Red-chips (16.4%).
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The China Fund, Inc. (CHN)
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Portfolio Analysis (continued)
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Top 10 Holdings
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Sector
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%
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Direct Investments
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Sector
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%
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INDUSTRIAL & COMMERCIAL BANK OF CHINA
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FINANCIALS
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6.0
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GOLDEN MEDITECH HOLDINGS, LTD. 15.0%, 5/16/13
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OTHERS
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1.5
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SUN HUNG KAI PROPERTIES, LTD.
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FINANCIALS
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5.8
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GOLDEN MEDITECH HOLDINGS, LTD. 15.0%, 11/16/13
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OTHERS
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1.4
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TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
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I.T.
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5.6
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||||
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HAND ENTERPRISE SOLUTIONS CO., LTD.
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I.T.
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5.4
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CHINA EVERBRIGHT INTERNATIONAL, LTD.
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INDUSTRIALS
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3.9
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CHINA MOBILE, LTD.
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TELECOM
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3.5
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DIGITAL CHINA HOLDINGS, LTD.
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I.T.
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3.1
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PING AN INSURANCE , LTD.
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FINANCIALS
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2.9
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ENN ENERGY HOLDINGS, LTD.
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UTILITIES
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2.8
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CHINA RESOURCES LAND, LTD.
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FINANCIALS
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2.8
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Total
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41.8
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Total
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2.9
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Source : State Street Bank and Trust Company as at January 31, 2013.
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Fund Details
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NAV
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$23.63
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Market price
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$22.47
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Premium/Discount
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-4.91%
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Market cap
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US$358.0m
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Shares outstanding
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15,932,408
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Exchange listed
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NYSE
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Listing date
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July 10, 1992
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Benchmark
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MSCI Golden Dragon Index (Total Return)
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Fund Manager
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Christina Chung
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Listed and direct investment manager
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RCM Asia Pacific Limited
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Source : State Street Bank and Trust Company as at January 31, 2013.
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Dividend History (10 years)
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Declaration
date
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Ex-dividend
date
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Record
date
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Payable
date
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Dividend/
Share
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Income
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Long-term Capital
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Short-term Capital
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10 Dec 2012
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20 Dec 2012
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24 Dec 2012
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28 Dec 2012
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3.2517
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0.3473
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2.9044
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0.0000
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8 Dec 2011
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21 Dec 2011
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23 Dec 2011
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29 Dec 2011
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2.9964
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0.1742
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2.8222
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0.0000
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8 Dec 2010
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21 Dec 2010
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24 Dec 2010
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29 Dec 2010
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2.2742
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0.3746
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1.8996
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0.0000
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9 Dec 2009
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22 Dec 2009
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24 Dec 2009
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29 Dec 2009
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0.2557
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0.2557
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0.0000
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0.0000
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8 Dec 2008
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22 Dec 2008
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24 Dec 2008
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23 Jan 2009
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5.8174
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0.4813
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5.3361
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0.0000
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7 Dec 2007
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19 Dec 2007
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21 Dec 2007
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25 Jan 2008
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12.1200
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0.2800
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9.0000
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2.8400
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8 Dec 2006
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19 Dec 2006
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21 Dec 2006
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29 Dec 2006
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4.0117
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0.2996
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2.7309
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0.9812
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9 Dec 2005
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19 Dec 2005
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21 Dec 2005
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29 Dec 2005
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2.5119
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0.2172
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2.2947
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0.0000
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13 Dec 2004
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20 Dec 2004
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22 Dec 2004
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7 Jan 2005
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3.5701
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0.1963
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3.2664
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0.1074
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19 Dec 2003
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29 Dec 2003
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31 Dec 2003
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15 Jan 2004
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1.7800
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0.0700
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0.6700
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1.0400
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Source : State Street Bank and Trust Company as at December 31, 2012
2
The China Fund, Inc. (CHN)
The China Fund Inc. NAV Performance of USD $10,000 since inception (with dividends reinvested at NAV price)
Past performance is not a guide to future returns.
Source : State Street Bank and Trust Company as at January 31, 2013.
The China Fund Inc. Premium / Discount
Past performance is not a guide to future returns.
Source : State Street Bank and Trust Company as at January 31, 2013.
3
The China Fund, Inc. (CHN)
Manager’s Commentary
Market review
In January, China equities continued to hold up well as investors remained generally positive. China macroeconomic data continued to be encouraging as the January Purchasing Managers’ Index (PMI) rose to a two-year high of 51.9 marking the fifth consecutive month of improvement. Q4/2012 GDP, industrial production and full year fixed asset investment numbers were broadly in line with the market forecast. Fund flows into China continued to favor the financial sector, especially the small banks and brokerages, given that the banking sector was seen as a proxy of the economy. While there was not much news flow on the details of economic reforms, the market has generally built in expectations of reform measures to be initiated by the new leaders over the course of the year.
In Taiwan, the market also sees positive developments in cross-strait cooperation between mainland China and Taiwan. The central bank of Taiwan signed an agreement with the Bank of China's Taipei branch, which officially kicked off the RMB business in Taiwan. This was part of a series of new measures to facilitate the liberalization of trade and investment with mainland China, which were generally perceived as a positive for this small and open economy over the long run.
Fund review
In January, the Fund outperformed relative to the benchmark mainly due to stock selection in the information technology and health care sectors.
The top contributor for the month was Hand Enterprise Solution. The share price was supported by the stable spending in the high-end IT market and benefits from the expansion of IT giants in the domestic high-end enterprise resource planning (ERP) segment. Another key contributor, Shenzhen International outperformed mainly due to positive news flow regarding the development of the Qianhai financial district, which provided the catalyst for the company’s share price. On the other hand, the share price of Kweichow Moutai continued to be weak due to the crackdown on extravagant spending by officials and state-owned enterprises' limited outlays on food and drink.
Outlook
On the heels of a sharp rebound in China equities since September 2012, we would expect share price consolidation in the short term. We are also entering into the earnings results reporting season. While 2012 earnings results are unlikely to have a significant impact on share prices, investors will continue to focus on the corporate earnings outlook. After an expected period of consolidation, a cyclical recovery in corporate earnings and reasonable valuations that drove the recent market should lead to further upside in China equities. As such, we would continue to look for opportunities to add exposure in selective domestic cyclical sectors, particularly the financials as well as secular growth areas.
Source : RCM Asia Pacific Limited as at January 31, 2013.
4
The China Fund, Inc. (CHN)
Portfolio Holdings
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CUSIP
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Security Description
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Cost Base
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Base MV
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Shares
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Percentage of Net Assets
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|||||
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B1G1QD902
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Industrial & Commercial Bank of China
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20,739,449.00
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22,460,061.00
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29,829,000
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6.0
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|||||
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685992000
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Sun Hung Kai Properties, Ltd.
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18,258,411.00
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21,828,534.00
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1,331,000
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5.8
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|||||
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688910900
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Taiwan Semiconductor Manufacturing Co., Ltd.
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16,072,089.00
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20,914,297.00
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6,084,000
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5.6
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|||||
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B3VN92906
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HAND Enterprise Solutions Co., Ltd.
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1,793,493.00
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20,290,740.00
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6,369,715
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5.4
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|||||
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663094902
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China Everbright International, Ltd.
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12,183,629.00
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14,819,270.00
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26,730,000
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3.9
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|||||
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607355906
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China Mobile, Ltd.
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12,606,802.00
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13,098,459.00
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1,191,000
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3.5
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|||||
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635186901
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Digital China Holdings, Ltd.
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13,205,899.00
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11,731,518.00
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7,256,000
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3.1
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|||||
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913BMZ902
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Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 04/01/13)
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9,494,980.00
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10,889,183.00
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1,418,047
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2.9
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|||||
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633393905
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Enn Energy Holdings, Ltd.
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606,420.00
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10,613,573.00
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2,204,000
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2.8
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|||||
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619376908
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China Resources Land, Ltd.
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5,946,868.00
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10,432,862.00
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3,436,000
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2.8
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|||||
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B6WY99909
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China Medical System Holdings, Ltd.
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853,792.00
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10,020,247.00
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11,669,300
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2.7
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|||||
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674842901
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Ruentex Development Co., Ltd.
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3,423,335.00
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9,722,099.00
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4,416,301
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2.6
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|||||
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B01CT3905
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Tencent Holdings, Ltd.
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7,312,795.00
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9,171,413.00
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262,100
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2.4
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|||||
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644094906
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Taiwan FamilyMart Co., Ltd.
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1,631,072.00
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8,783,433.00
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1,942,652
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2.3
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|||||
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B00G0S903
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CNOOC, Ltd.
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8,859,687.00
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8,743,770.00
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4,228,000
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2.3
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|||||
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17313A533
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Gree Electric Appliances, Inc. Access Product (expiration 01/17/14)
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6,453,442.00
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8,569,463.00
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1,838,546
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2.3
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|||||
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B2R2ZC908
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CSR Corp., Ltd.
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7,466,210.00
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8,181,059.00
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9,930,000
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2.2
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|||||
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643648900
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Shenzhen International Holdings, Ltd.
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3,714,750.00
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8,093,801.00
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60,947,500
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2.1
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|||||
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671815900
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Qingling Motors Co., Ltd.
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8,718,221.00
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7,990,459.00
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28,960,000
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2.1
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|||||
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B1YMYT902
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Hiwin Technologies Corp.
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9,693,067.00
|
7,567,160.00
|
942,750
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2.0
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|||||
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B15456906
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Bank of China, Ltd.
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6,465,433.00
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6,795,786.00
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13,762,000
|
1.8
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|||||
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634007900
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Kunlun Energy Co., Ltd.
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5,034,472.00
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6,496,745.00
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3,122,000
|
1.7
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|||||
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959GRNII9
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Taiwan Life Insurance Co., Ltd., 4.0%, 12/28/14
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6,178,274.00
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6,477,849.00
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200,000,000
|
1.7
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|||||
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670039007
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Uni-President Enterprises Corp.
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1,090,258.00
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6,434,116.00
|
3,667,508
|
1.7
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|||||
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629099904
|
WT Microelectronics Co., Ltd.
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5,796,850.00
|
6,137,346.00
|
4,819,530
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1.6
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|||||
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637248907
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MediaTek Inc.
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6,194,126.00
|
6,115,083.00
|
559,000
|
1.6
|
|||||
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626073902
|
Delta Electronics, Inc.
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4,550,608.00
|
5,852,539.00
|
1,615,000
|
1.7
|
|||||
|
99ZMCS903
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Kweichow Moutai Co., Ltd. Access Product (expiration 10/26/15)
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7,383,669.00
|
5,833,253.00
|
204,751
|
1.5
|
|||||
|
626735906
|
Hong Kong Exchanges and Clearing, Ltd.
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4,947,274.00
|
5,820,933.00
|
306,500
|
1.5
|
|||||
|
986PLF007
|
Golden Meditech Holdings, Ltd. 15.0%, 5/16/13
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5,557,209.00
|
5,554,164.00
|
58,222,500
|
^ |
1.5
|
||||
|
986PLG005
|
Golden Meditech Holdings, Ltd. 15.0%, 11/16/13
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5,557,209.00
|
5,554,164.00
|
58,222,500
|
^ |
1.4
|
||||
|
620267906
|
Advantech Co., Ltd.
|
4,104,779.00
|
5,370,565.00
|
1,284,000
|
1.4
|
|||||
|
644806002
|
Hutchison Whampoa, Ltd.
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4,088,915.00
|
5,063,802.00
|
453,000
|
1.3
|
|||||
|
651795908
|
Natural Beauty Bio-Technology, Ltd.
|
4,906,910.00
|
4,859,548.00
|
47,710,000
|
1.3
|
|||||
|
643055908
|
Golden Meditech Holdings, Ltd.
|
4,555,715.00
|
4,382,231.00
|
35,040,000
|
1.2
|
|||||
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600245005
|
ASM Pacific Technology, Ltd.
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4,294,518.00
|
4,084,610.00
|
323,600
|
1.1
|
|||||
|
B633D9904
|
Zhongsheng Group Holdings, Ltd.
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3,466,065.00
|
3,981,305.00
|
2,662,000
|
1.1
|
|||||
|
665157905
|
Comba Telecom Systems Holdings, Ltd.
|
7,565,579.00
|
3,970,241.00
|
10,958,500
|
1.1
|
|||||
|
B236JB905
|
Tiangong International Co Ltd
|
3,744,634.00
|
3,887,577.00
|
12,616,000
|
1.0
|
|||||
|
B1JNK8908
|
China Coal Energy Co., Ltd.
|
4,377,475.00
|
3,801,845.00
|
3,405,000
|
1.0
|
|||||
|
B3ZVDV905
|
Sinopharm Group Co., Ltd.
|
2,527,529.00
|
3,719,110.00
|
1,212,000
|
1.0
|
|||||
|
B1CKXF901
|
Zhengzhou Yutong Bus Co., Ltd. Access Product (expiration 01/20/15)
|
3,096,799.00
|
3,616,380.00
|
825,469
|
1.0
|
|||||
|
B1TDQL904
|
Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 01/17/14)
|
1,566,145.00
|
1,611,822.00
|
209,900
|
0.4
|
|||||
|
B4PTR3906
|
Fook Woo Group Holdings, Ltd.
|
7,974,083.00
|
1,119,475.00
|
25,314,000
|
0.3
|
|||||
|
B04W2V905
|
FU JI Food & Catering Services
|
4,246,696.00
|
0.00
|
5,462,000
|
0.0
|
|||||
|
ACI0090H8
|
Zong Su Foods (acquired 09/21/10)
|
15,000,034.00
|
0.00
|
2,677
|
0.0
|
^Nominal value owed in HK dollars.
Source : State Street Bank and Trust Company as at January 31, 2013.
5
The China Fund, Inc. (CHN)
The information contained herein has been obtained from sources believed to be reliable but RCM and its affiliates do not warrant the information to be accurate, complete or reliable. The opinions expressed herein are subject to change at any time and without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Investors should consider the investment objectives, risks, charges and expenses of any mutual fund carefully before investing. This and other information is contained in the fund’s annual and semiannual reports, proxy statement and other fund information, which may be obtained by contacting your financial advisor or visiting the fund’s website at www.chinafundinc.com. This information is unaudited and is intended for informational purposes only. It is presented only to provide information on investment strategies and opportunities. The Fund seeks to achieve its objective through investment in the equity securities of companies and other entities with significant assets, investments, production activities, trading or other business interests in China or which derive a significant part of their revenue from China. Investing in non-U.S. securities entails additional risks, including political and economic risk and the risk of currency fluctuations, as well as lower liquidity. These risks, which can result in greater price volatility, will generally be enhanced in less diversified funds that concentrate investments in a particular geographic region. The Fund is a closed-end exchange traded management investment company. This material is presented only to provide information and is not intended for trading purposes. Closed-end funds, unlike open-end funds, are not continuously offered. After the initial public offering, shares are sold on the open market through a stock exchange, where shares may trade at a premium or a discount. Holdings are subject to change daily.