Die chinesischen Aktienmärkte legten im Mai den Rückwärtsgang ein, da sich die wieder aufflammenden Spannungen zwischen den USA und China rund um die Hongkong-Frage negativ auswirkten. Auf dem Hintergrund dieser Marktereignisse verzeichnete der China-Fonds eine Wertentwicklung von -5,7 Prozent. Jing Ning, FondsManagerin des Fidelity China Focus Fund A Acc EUR (WKN A0M94A, ISIN LU0318931192), analysiert in ihrem aktuellen Marktbericht für Mai die Portfoliostruktur des auf günstig bewertete Unternehmen aus dem “Reich der Mitte” fokussierten FondsProduktes. In ihren Managersichten erhalten SJB Investoren alle wichtigen Informationen über den in der FondsStrategie SJB Substanz enthaltenen Fidelity-Aktienfonds.
Market Environment
Chinese equities fell over the month due to a re-escalation of tensions with the US. A new national-security law that China imposed on Hong Kong fuelled tensions. In addition, the US government imposed new restrictions on Chinese technology giant Huawei and uncertainty remained around a US bill that could impact Chinese companies on its exchange. Nevertheless, optimism around a potential COVID-19 vaccine in the near term, an under-control COVID-19 situation and improving domestic economic activity limited the loss. China’s National People’s Congress (NPC) projected a fiscal deficit budget of over 3.6% of GDP, which will focus on financial relief for small businesses and households, as well as infrastructure investment. The NPC also decided to drop its traditional annual economic growth target given the significant challenges facing the economy following the COVID-19 outbreak. In other key developments, China further opened up its financial markets to foreign investors. The country finalised rules to scrap quotas under two major inbound investment schemes, giving qualified foreign institutions unlimited access to Chinese stocks and bonds. On the economic front, industrial production and exports for April exceeded market estimates. However, retail sales for April fell below expectations and fixed asset investment contracted over the January–April period, broadly in line with expectations. On the monetary policy front, the People’s Bank of China kept its benchmark lending rate steady. At the sector level, real estate and financials declined, while consumer and health care stocks were the best performers.
Fund Performance
The fund returned -5.7%, while the index returned -0.7% in May. The underperformance was dominated by newsflow around a new security law instituted by China that renewed US-China tensions. An underweight allocation to internet related ADRs weighed on relative performance as an ongoing surge in global liquidity boosted growth stocks, making it a lacklustre month for the value-oriented fund. Preferred positions in China Mobile, China Life Insurance and China Overseas Land & Investment witnessed profit taking following strong gains in the previous month. China Mobile was also hurt by speculation that tighter export restrictions on telecommunication equipment manufacturer Huawei may impact its fifth-generation (5G) rollout. In reality, China Mobile entered into a collaboration with China Broadcasting Network in May to co- construct 5G networks. China Overseas Land and Investment maintains a disciplined capital allocation approach. As a state-owned enterprise (SoE), it has access to lower cost financing and credit versus its private sector peers. Zhuzhou CRRC Times Electric came under pressure as investors worried that locomotive demand would be adversely impacted in the short term, as passenger volumes have shrunk. Encouragingly, holdings in Sinotruk and Shandong Weigao Group Medical Polymer were among the key contributors to returns. Their growth prospects continued to unfold and supported investor interest. The holding in Uni-President China gained after it announced upbeat earnings, supported by strong sales growth in its noodles segment in the first quarter of 2020.
Fund Positioning
The manager has a value and contrarian style that is reflected in the fund’s positioning. Her bottom-up approach focuses on determining the intrinsic value of a company rather than pursuing themes. As an aggregate of the manager’s security selection process, the fund remains notably overweight in the energy, financials and materials sectors. Among key active positions, state-owned telecommunications operator China Mobile is the largest overweight holding in the portfolio. It is well positioned as a key beneficiary of the 5G rollout in China, as is likely to enjoy faster 5G subscriber growth with alleviated capital expenditure pressures. Another key holding, China Life Insurance is a beneficiary of long-term structural growth in the Chinese insurance industry. Its management is focussed on enhancing its product mix and improving agent productivity. Exploration and production company CNOOC’s strong balance sheet and low-cost profile will help it to weather a challenging environment. The manager retained the exposure to state-owned property developers China Overseas Land and Investment and China Resources Land as they are beneficiaries of low financing costs and have a healthy balance sheet. A hugely under-recognised opportunity in China is the income paradigm, which is a significant tailwind for the portfolio. The fund’s metrics clearly reflect the very strong income angle that is on offer at attractive valuation levels. This is a noteworthy cushion in the portfolio. During this phase of heightened uncertainty, the manager maintains that it is quite important to focus on asset-based valuations and on dividend cushions vs. discounted cash flows, which in themselves are hard to predict with a degree of accuracy.
