BOCI-Prudential Asset Management

Transcription

1 Monthly Investment BOCI-Prudential Asset Management Newsletter August 2017 (ata as of 31 Jul 2017) Equity Market United States Major stock market indices in the US rose during July. Monetary policy outlook continued to affect the market. Fed s intention to shrink balance sheet and hawkish tone from major central banks dragged the market during the early part of the month. Fed chairman s relatively dovish tone later in the month, along with good corporate earnings result lifted the equity market. United States ow Jones Industrial Index As the market now expects increasingly more detail on Fed s balance sheet management in September, details of Fed s plan, and any related data such as inflation will likely affect market direction in the months to come. Europe European equity markets showed positive sentiment in July. Belgium outperformed among the European nations. Conversely, Luxembourg underperformed other European markets. UK equity market rose last month due to better corporate results and growing optimism in the strength of global economy. Going forward, political development in the country and growth prospect in Europe would be the key risk to UK equities Asia equities extended their streak of gains to a seventh month. Although equities got off to a muted start, sentiments shifted upward on resilient macro and earnings releases as well as dovish comment from the Fed on the pace of policy tightening. In the near term, the key risks that are worth watching include the pace of removing monetary accommodation in the developed-world, the strength of China s growth momentum and geopolitical tensions in the region. Lacking any catalysts, Japan equity market was up slightly but lagged behind global peers. Amid benign global growth, Japanese corporate earnings continued to be a supportive factor. However, focus in July was shifted to domestic political risk which dragged on overall market performance. Mainland China & Hong Kong Major mainland equity indices performed divergently in July. ChiNext and Shenzhen Composite Index sold-off briefly after the latest National Financial Work Conference concluded with an emphasis on regulatory tightening. Meanwhile, Shanghai Composite Index was less affected by the news, and eventually closed the month near its April s high. Both Hang Seng H-shares and Red-chip Index outperformed their mainland peers in July. Hang Seng Index started the second half on a high note, extending rally to a two-year closing high. Mainland China s tight control over internet entertainment added volatility in early July, but Hong Kong stock market quickly recovered its uptrend on the back of stronger than expected economic numbers in China. Mainland Politburo s stance towards economic stability over financial deleveraging also provided a boost. J STOXX 50 Index Asia & Japan MSCI AC Asia Pacific ex Japan Index Hang Seng China Enterprise Index Hong Kong Hang Seng Index P.1 Figures Source: FactSet and Bloomberg

2 Bond Market United States Citigroup World Government Bond Index US Treasury traded in a range in July after the selloff in June. Faster job growth with slowly improving labor participation in June and elevated consumer confidence supported for higher yield. However, the slower inflation and retail sales readings, lingering political uncertainties in US and raised geopolitical risk led 10-year US Treasury yield lower In addition, the relatively dovish Fed Chief Yellen s testimony to Congress and July Fed statement kept US Treasury in range bound. All in all, 10-year US Treasury yield was close to flat on monthon-month basis Europe In the Eurozone, European bond market performed mixed. German bund suffered as strong economic indicators and optimistic sentiment in financial market sent German bund yields higher. However, the loss was limited as ECB pledged to maintain policy continuation. In peripheral space, on the back of improving fundamentals and relaxed financial market conditions, both Italian and Spanish bond market performed well. In the UK, economic data came in with a downside surprise. Given a sharp moderation in fundamentals, the rate hike expectation, which was spurred in June by BoE s hawkish comments, was unwound. The yield curve flattened. Asia United States Government Bond Yield (10 Yrs) 3.0% 2.5% 2.0% 1.5% 1.0% Japan Government bond (JGB) market started the month with selling pressure, owing much to higher bond yields overseas as the European-led taper tantrum risk heightened. To curb increase in yields, Bank of Japan (BoJ) called for an unlimited debt-purchase operation. Bond yields fell as a result. Later on, bond market entered into a range-trading mode, amid a similar development overseas. Australian Government Bond (AGB) market traded weaker in July. Bond yields rose across the curve, as odds for a rate-hike in the year ahead increased, albeit the lack of a hawkish turn by the Reserve Bank of Australia (RBA). Hong Kong Government bonds moved generally in tandem with its US counterparts through the month, with interest rate gap between the two markets staying wide. Bond yields fell overall, led by the shorter-end tenors. im Sum Bond recorded gain in July. Stabilizing economic data, improving trade growth and stable foreign exchange reserve all supported im Sum Bond market. With supply of im Sum Bonds is expected to remain slow, the im Sum Bond market stayed relatively quiet. Money Market US US weakened further against most major currencies in July. Slower inflation reading continue to cast doubt on the pace of policy normalization. Lingering political uncertainties in US and global central banks intention to removing policy accommodation also weighed on US. Europe In the Eurozone, the Euro extended its winning streak into the fifth month. espite that ECB pledged to keep accommodative policy in place, the rally was not interrupted during the month as most economic data beat market expectations. Meanwhile, broad-based US weakness also boosted Euro. EUR/US In the UK, Sterling traded ups and downs in response to economic data reported during the month. Over the month, Sterling appreciated against US, underperforming other majors. US/JPY 98 Japan 102 JPY started the month weaker, as higher bond yields abroad prompted widening interest-rate gaps between Japan and its overseas counterparts. The currency swung into gain later in the month. Heightened cautiousness in market sentiment plus the broad US weakness fueled the bullish impulse in JPY RMB 122 Onshore (CNY) and Offshore (CNH) Renminbi strengthened against US. The overall appreciation of RMB was mainly due to continuous US weakness. Besides, stabilizing China economic data and easier liquidity conditions also supported the currency. Figures Source: FactSet and Bloomberg 2017 Citigroup Index LLC. All Rights Reserved. P.2

3 P.3 IMPORTANT NOTES: Investment involves risk and the Sub-s of the BOCHK Investment s, NCB Investment s and BOCIP Asset Management Investment s (the Sub-s ) mentioned in this document may not be suitable for everyone. Past performance is not indicative of future performance. The Sub-s are subject to market fluctuations and exchange rate fluctuations and to the risks inherent in all investments. Price of Units and the income generated from them (if any) may go down as well as up. Therefore, investors could face no returns and/or suffer significant loss related to the investments. There is no guarantee in respect of repayment of principal. Investing in emerging markets may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks / control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility. For those Sub-s that invest in single country / region, they are subject to concentration or single country / region risk. For those Sub-s with investments relating to Mainland market, they are subject to the risks of investing in emerging markets generally and the risks specific to the China market in particular. They may also subject to PRC tax risk. For those Sub-s invest in equities, the relevant Sub-s investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors. For those Sub-s invest in small-capitalisation / mid-capitalisation companies, they are subject to risk associated with small-capitalisation / mid-capitalisation companies. The stock of small-capitalisation / mid-capitalisation companies may have lower liquidity and their prices are more volatile to adverse economic developments than those of larger capitalisation companies in general. For those Sub-s invest in the equity market in Mainland China, they are subject to risk associated with high volatility of the equity market in Mainland China, and risk associated with regulatory/ exchanges requirements/ policies of the equity market in Mainland China. For those Sub-s which have direct access to certain eligible A shares via Shanghai-Hong Kong Stock Connect and / or Shenzhen-Hong Kong Stock Connect, they are subject to risks associated with the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect (collectively the Shanghai and Shenzhen Connect ). The relevant rules and regulations on Shanghai and Shenzhen Connect are subject to change which may have potential retrospective effect. Each of Shanghai and Shenzhen Connect is subject to a set of aily Quota, which does not belong to the Sub-s and can only be utilized on a firstcome-first serve basis. Where a suspension in the trading through the programme is effected, the Sub-s ability to invest in A shares or access the PRC market through the programme will be adversely affected. In such event, the Sub-s ability to achieve their investment objectives could be negatively affected. For those Sub-s that may invest in A shares indirectly through investment in equity linked instruments ( ELIs ) issued by institutions or their affiliates with qualified foreign institutional investors ( QFII ) status in the PRC, they are subject to risk relating to Investment in ELIs, including: illiquidity risk, potential lack of economic benefits of underlying A shares, repatriation risk, valuation risk, credit risk and QFII risk. For those Sub-s that may invest in debt securities, they are subject to credit risk, counterparty risk, credit rating risk, interest rate risk, downgrading risk, sovereign debt risk (if applicable) and valuation risk. For those Sub-s that may invest in Mainland China onshore debt securities/fixed income instruments, they are subject to credit rating agency risk associated with investments in Mainland China onshore debt securities/fixed income instruments. For those Sub-s that may invest in debt securities/fixed income instruments in Mainland market, they are subject to liquidity and volatility risks associated with investments in debt securities/fixed income instruments in Mainland market. For those Sub-s that may invest in debt securities rated below investment grade or unrated debt securities, investors should be aware such securities are generally subject to lower liquidity, higher volatility and greater risk of loss of principal and interest than high-rated debt securities. For those Sub-s that are money market funds, investor should note that the purchase of a Unit in those Sub-s is not the same as placing funds on deposit with a bank or deposit-taking company, that the Manager has no obligation to redeem Units at the issue price and those Sub-s are not subject to the supervision of the Hong Kong Monetary Authority. They are also subject to interest rate risk, market risk and credit/ counterparty risk. For those Sub-s that may use derivatives, they are subject to derivative instruments risk. For those Sub-s invest primarily in or their investments are concentrated in single, limited or specialist sector(s) or particular industry sector(s), they are subject to sector concentration risk and risk of investing in specific sector(s). For those Sub-s invest in property-related investment instruments, they are subject to real estate/real estate securities risk and real estate investment trusts ( REITs ) risks. For those Sub-s applying active asset allocation strategy, they are subject to risk of specific investment strategy and risk relating to active asset allocation strategy. For those Sub-s which may invest in underlying funds, they are subject to the risk relating to underlying funds, specific nature of fund of funds and fee structure of fund of funds. For those Sub-s which may invest in other collective investment schemes ( CISs )/funds, they are subject to the risks of investing in other CISs/funds. For those Sub-s with investments in ETFs, they are subject to the risks relating to investment in ETFs. In relation to a Sub- which has Currency Hedged Class(es) of Units or class(es) of Units denominated in a currency other than the base currency of the Sub-, investors should note the risk relating to those class(es) of Units denominated in a currency other than the base currency and cross-class liability risk. In relation to those Sub-s which have Units denominated in RMB or have investments denominated in RMB or exposure to RMB currency, investors should note the foreign exchange and RMB currency and conversion risks, and risk relating to redemption and/or distribution payments (if any). In relation to the distribution policy of those Sub-s for which the Manager will declare an indicative per annum distribution rate at the beginning of the calendar year, Unitholders will receive written notice regarding such indicative per annum distribution rate. As a whole, distributions paid in that year shall be no less than the indicative per annum distribution rate, any change of such rate will require no less than one (1) month s prior notice to Unitholders. In relation to those Sub-s that may pay distributions out of capital or effectively out of capital: i) the Manager will normally make distributions out of net income received or receivable by the relevant Sub- / class of Units. However, in the event that the net income is insufficient to pay the distributions that it declares, the Manager may also, in its absolute discretion, determine that such distributions be paid out of the capital of the relevant Sub- / class of Units, or the Manager may, in its discretion, pay distributions out of gross income while charging/ paying all or part of the relevant Sub- s / class of Units fees and expenses to/ out of the capital of the relevant Sub- / class of Units, resulting in an increase in distributable income for the payment of distributions by the relevant Sub- / class of Units and therefore, the relevant Sub- / class of Units may effectively pay distributions out of capital. This may reduce the capital that the relevant Sub- / class of Units has available for investment in future and may constrain capital growth; and ii) investors should be aware that in circumstances where payment of distributions out of capital or effectively out of capital amounts to a return or withdrawal of part of the amount investors originally invested or from any capital gains attributable to that original investment. Any distributions involving payment of distributions out of capital or payment of distributions effectively out of capital (as the case may be) may result in an immediate decrease in the Net Asset Value per Unit. Investors should also note the liquidity risk, risks relating to obligations to comply with Automatic Exchange of Financial Account Information, risks relating to obligations under Foreign Account Tax Compliance Act ( FATCA ) Regulations, and withholding tax risk under FATCA regime. Please refer to the offering document of the Sub-s for further details including investment objectives and policies, charges and expenses, and risk factors, before making any investment decision.

4 Performance (Class A) (ata as at 31 Jul 2017) Name Inception ate enominated Currency No. of Holdings 1 Size (Million) Latest NAV per unit Cumulative Performance 12 Months (Gross istribution Reinvested) (%) Calendar Year Performance 7 NAV per unit 10 (Gross istribution Reinvested) (%) Since Highest Lowest YT 3 Months 1 Year 3 Years 5 Years Inception Morningstar Overall Rating TM 8 Mixed Asset BOCHK Aggressive Growth BOCHK Balanced Growth BOCHK Conservative Growth 31/10/2003 US N/A /10/2003 US N/A /10/2003 US N/A BOCHK Sterling Income 3 12/05/2006 GBP BOCHK Australia Income 4 28/01/2005 AU BOCHK China Income BOCHK Hong Kong Income NCB China Balanced Sector / Thematic 20/02/2004 HK /04/2004 HK /03/2008 HK BOCHK Asia Pacific Property 6 23/03/2007 US BOCHK China Consumption Growth 2 28/03/2008 HK NCB China Resources Opportunities 2 31/10/2007 HK BOCIP Japan Small & Mid Cap Opportunity BOCIP China Health Care BOCIP China Wealth 27/02/2013 HK /06/2015 HK Class A - HK Units 28/03/2014 HK Class A - RMB Hedged Currency Class Units 9 # 30/10/2015 RMB BOCIP China Value 2 Class A - HK Units 21/01/2011 HK Class A - RMB Hedged Currency Class Units 9 # 30/10/2015 RMB 42 1, Class A - RMB Units # 23/02/2016 RMB BOCIP Hong Kong Value Class A - HK Units 30/09/2014 HK Class A - RMB Hedged Currency Class Units 9 # 30/10/2015 RMB BOCIP Hong Kong Low Volatility Equity 21/08/2015 HK P.4

5 Performance (Class A) (ata as at 31 Jul 2017) Name Inception ate enominated Currency No. of Holdings 1 Size (Million) Latest NAV per unit Cumulative Performance 12 Months (Gross istribution Reinvested) (%) Calendar Year Performance 7 NAV per unit 10 (Gross istribution Reinvested) (%) Since Highest Lowest YT 3 Months 1 Year 3 Years 5 Years Inception Morningstar Overall Rating TM 8 Equity BOCHK Global Equity Class A - US Units 12/07/2002 US Class A - RMB Units # 29/06/2015 RMB BOCHK Asia Pacific Equity BOCHK Asia Pacific Equity Income 25/10/2002 US /03/2006 US BOCHK Japan Equity 09/07/2004 US BOCHK China Equity 2 Class A - HK Units 25/10/2002 HK , Class A - US Units 04/05/2015 US BOCHK China Golden ragon BOCHK Hong Kong Equity 2 21/05/2004 HK 55 1, Class A - HK Units 12/07/2002 HK , Class A - RMB Units # 29/06/2015 RMB NCB China Equity 2 27/06/2007 HK Bond & Money Market BOCHK Global Bond 25/10/2002 US BOCHK Hong Kong ollar Income 2 12/07/2002 HK , BOCHK RMB Fixed Income 5 Class A - RMB Units # 20/03/2012 RMB Class A - HK Units 14/12/2012 HK Class A - US Units 14/12/2012 US BOCHK US ollar Money Market BOCHK HK ollar Money Market NCB HK ollar Money Market BOCIP HK ollar Money Market BOCIP Flexi HK Income 12/07/2002 US /07/2002 HK 8 1, /06/2007 HK N/A /04/2010 HK N/A /12/2013 HK Source: BOCI-Prudential Asset Management Limited P.5

6 1 No. of Holdings comprise equities and bonds invested by the Sub-, and not applicable to fund of funds and money market funds. 2 The Sub- is approved as Eligible Collective Investment Scheme under Capital Investment Entrant Scheme ( CIES ) of Hong Kong Special Administrative Region ( HKSAR ). The HKSAR Government has announced that the CIES has been suspended with effect from 15 January 2015 until further notice. The Immigration epartment of HKSAR ( Immigration epartment ) will continue to process applications received on or before 14 January 2015, whether already approved (including approval-in-principle and formal approval) or still being processed. For further details and the related Frequently Asked Questions, please visit the website of the Immigration epartment at 3 The Units of the Sub- are denominated in GBP and therefore investors who invest with a currency other than GBP may be subject to foreign exchange risk. 4 The Units of the Sub- are denominated in AU and therefore investors who invest with a currency other than AU may be subject to foreign exchange risk. 5 The Sub- is denominated in RMB. Units must be subscribed and redeemed in the currency of the particular Class of Units (i.e. RMB, HK or US) being subscribed for or redeemed (as the case may be). Investors may be subject to RMB currency risk and foreign exchange risk. 6 The BOCHK Asia Pacific Property has been authorized by the SFC under section 104 of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and the Code on Unit Trusts and Mutual s but not the Code on Real Estate Investment Trusts. SFC authorization is not a recommendation or endorsement of the Sub-, nor does it guarantee the commercial merits of the Sub- or its performance. It does not mean the Sub- is suitable for all investors nor is it an endorsement of the Sub- s suitability for any particular investor or classes of investor. 7 If the history of the relevant class of Units of the Sub- is less than 1 year in the calendar year, the corresponding calendar year performance will be calculated from the inception date to that calendar year-end. 8 ata Source 2017 Morningstar, Inc. All Rights Reserved. The star assignment will have the top 10% of funds in a category receiving five stars; the next 22.5% having four stars; the next 35% having three stars; the next 22.5% having two stars; and the remaining 10% having 1 star; s with less than three years history would not receive Morningstar rating. When a category has less than 5 members with at least 3 years total return data, no star rating is assigned to the funds in the group. 9 Investor should pay attention to the Currency Hedged Class risk. There can be no assurance that any currency hedging strategy employed by the Manager will effectively eliminate the currency exposure of the relevant Sub- and Unitholders of the relevant Currency Hedged Class may be exposed to currency exchange risk for non-hedged classes. Further, if the counterparties of the instruments used for hedging purposes default, Unitholders of the Currency Hedged Class may be exposed to currency exchange risk on an unhedged basis and may therefore suffer further losses. Where hedging is undertaken, it may preclude Unitholders in the relevant Currency Hedged Class from benefiting from an increase in the value of the relevant Sub- s base currency Months Highest / Lowest NAV per Unit was calculated by reference to the NAV per Unit on each month s last dealing day. Where class of Units is denominated in a currency other than the base currency of the Sub-, investors may be subject to currency risk and/ or foreign exchange risk. # Investors of Class A RMB Hedged Currency Class Units or Class A RMB Units may be subject to RMB currency and conversion risks. In relation to the Sub-s, the BOCHK Sterling Income, BOCHK Australia Income, BOCHK China Income, BOCHK Hong Kong Income, BOCHK Asia Pacific Equity Income, BOCHK Hong Kong ollar Income and BOCHK RMB Fixed Income, the amount of distributions (if any) of the relevant Sub- is not guaranteed and may go up and down. The Manager retains the discretion to determine or vary the frequency and dates for distribution. Please refer to istribution Policy stated in the offering documents of the relevant Sub- for details. In relation to NCB China Balanced, the distribution policy was amended with effect from 1 ecember The Manager intends to declare distributions to Unitholders on a quarterly basis and has the sole and absolute discretion to determine or vary the frequency and dates for distributions. Please refer to istribution Policy stated in the offering documents of the Sub- for details. Please refer to the Manager s website for the composition of the latest distribution (i.e. the relative amounts paid out of (i) net distributable income and (ii) capital). Investors should note that a positive distribution yield does not imply a positive return. In relation to the Sub-s, BOCIP China Health Care and BOCIP Flexi HK Income, the Manager will declare an indicative per annum distribution rate at the beginning of each calendar year. The indicative per annum distribution rate each year may vary and may go up and down. The Manager has the sole and absolute discretion to determine or vary the frequency and dates for distributions. Please refer to istribution Policy stated in the offering documents of the relevant Sub- for details. Please refer to the Manager s website for the composition of the latest distribution (i.e. the relative amounts paid out of (i) net distributable income and (ii) capital). Investors should note that a positive distribution yield does not imply a positive return. In relation to the Sub-s, BOCIP China Wealth, BOCIP China Value and BOCIP Hong Kong Value, the Manager will declare an indicative per annum distribution rate for the relevant class of Units at the beginning of each calendar year. The indicative per annum distribution rate each year may vary and may go up and down. The Manager has the sole and absolute discretion to determine or vary the frequency and dates for distributions. The distribution amount and/or rate of a particular class of Units may be more than or less than such amount and/or rate of the other class(es) of Units. Furthermore, the compositions of the distributions of a particular class of Units (i.e. the relative amounts paid out of (i) net distributable income and (ii) capital) may not be the same as that of the other class(es) of Units. Please refer to istribution Policy stated in the offering documents of the relevant Sub- for details. Please refer to the Manager s website for the composition of the latest distribution (i.e. the relative amounts paid out of (i) net distributable income and (ii) capital). Investors should note that a positive distribution yield does not imply a positive return. The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCIP China Wealth and is calculated based on the base currency of the Sub- (i.e. HK). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCIP China Value and is calculated based on the base currency of the Sub- (i.e. HK). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCIP Hong Kong Value and is calculated based on the base currency of the Sub- (i.e. HK). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCHK Global Equity and is calculated based on the base currency of the Sub- (i.e. US). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCHK China Equity and is calculated based on the base currency of the Sub- (i.e. HK). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCHK Hong Kong Equity and is calculated based on the base currency of the Sub- (i.e. HK). The figure represents the aggregate of the fund size (in million) of all classes of Units of BOCHK RMB Fixed Income and is calculated based on the base currency of the Sub- (i.e. RMB). The manager s comment above solely reflects the opinion, view and interpretation of the fund managers as of the date of issuance of this document. Investors should not solely rely on such information to make any investment decision. performance is calculated in the base currency of the Sub- or the denominated currency of the relevant class of Units of the Sub- on NAV-to-NAV basis with gross distribution reinvested. Investors should carefully consider their own investment objectives, risk tolerance level and other circumstances and seek independent financial and professional advice as appropriate before making any investments. Please refer to the offering documents of the relevant Sub-s for further details (including risk factors, fees and charges and fund information). This document is for information purposes only and the information contained herein does not constitute any distribution or any offer or solicitation to buy or sell. Investors should note that Bank of China (Hong Kong) Limited and Nanyang Commercial Bank, Limited are not the Manager of the BOCHK Investment s and NCB Investment s whilst BOCI-Prudential Asset Management Limited is the Manager of these s. Bank of China (Hong Kong) Limited is the Sponsor of BOCHK Investment s and the istributor of certain sub-funds of BOCHK Investment s, and Nanyang Commercial Bank, Limited is the Sponsor and istributor of the NCB Investment s. The information herein is based on sources believed to be reliable. BOCI-Prudential Asset Management Limited makes no representation, warranty or undertaking, whether express or implied, in relation to the information in this document. All such information is subject to change without notice. All copyrights are reserved. This document should not be reproduced or further distributed to any person or entities, whether in whole or in part, for any purposes. The document and the Manager s website have not been reviewed by the SFC. Issuer: BOCI-Prudential Asset Management Limited For further information, please contact BOCI-Prudential Asset Management: P.6 Address: 27/F, Bank of China Tower, 1 Garden Road, Central Investment Services Hotline: (852) Website: