United Greater China Fund

Transcription

1 United Greater China Fund Semi Annual Report for the period 1 st January to 30 th June 2013

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3 MANAGER UOB Asset Management Ltd Registered Address: 80 Raffles Place UOB Plaza Singapore Company Registration No. : Z OPERATIONS ADDRESS 80 Raffles Place #06-00, UOB Plaza 2 Singapore Tel: DIRECTORS OF UOB ASSET MANAGEMENT Terence Ong Sea Eng Cheo Chai Hong Thio Boon Kiat TRUSTEE / REGISTRAR HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02, HSBC Building Singapore CUSTODIAN The Hongkong and Shanghai Banking Corporation Limited 1 Queen s Road Central Hong Kong AUDITORS PricewaterhouseCoopers LLP 8 Cross Street #17-00, PWC Building Singapore SOLICITORS TO THE MANAGER Tan Peng Chin LLC 30 Raffles Place #11-00, Chevron House Singapore SOLICITORS TO THE TRUSTEE Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore

4 A) Fund Performance Fund Performance/ Benchmark Returns 3 mth % Growth 6 mth % Growth 1 yr % Growth 3 yr Ann Comp Ret 5 yr Ann Comp Ret 10 yr Ann Comp Ret Since Inception 29 May 1997 Ann Comp Ret United Greater China Fund Benchmark Source : Lipper, a Thomson Reuters Company. Note: The performance returns of the Fund are in Singapore dollars based on a NAV-to-NAV basis with net dividends reinvested. The benchmark of the Fund: MSCI Golden Dragon. For the six months ended 30 June 2013, the net asset value of the Fund fell 2.35%, compared with a 1.64% decrease in the benchmark MSCI Golden Dragon index in Singapore dollar terms. The Fund s performance was mainly dragged down by Taiwan allocation and stock selection effects. The Fund held an underweight position in Taiwan, which outperformed the benchmark and an overweight in China, which underperformed. The Fund benefitted from favorable securities selection, most notably in Hong Kong, and in the Energy and Consumer Discretionary sectors. This was off-set by adverse selection effects in Taiwan, and in the Information Technology, Telecoms and Consumer Staples sectors. Key contributors to performance include: Taiwan Semiconductor (Information Technology), Anton Oilfield Services (Energy), AAC Technologies (Information Technology), Sasa International (Consumer), Haier Electronics (Consumer) and Galaxy Entertainment Group (Consumer). Key detractors include: China South Locomotive (Industrials), China Life Insurance (Financials), CNOOC (Energy), China Shenhua Energy (Energy), Hon Hai Precision (Information Technology) and HTC Corporation (Information Technology). The Fund is currently overweight in China, neutral in Hong Kong and underweight in Taiwan. It has its most active overweight position in sectors with positive structural growth drivers such as Consumer Discretionary and Energy, while being underweight in the deep cyclical sectors including Materials and Industrials. As at end June 2013, the Fund had the following regional asset allocation: China (45.2%), Hong Kong (22.9%), Taiwan (26.5%), and the remainder in cash (5.4%). 2

5 Economic and Market Review The Greater China equity markets ended the first half of the year with negative returns, in a period where emerging market equities underperformed developed markets. After a positive performance in the first part of the year, the markets took a tumble from May as the US Fed raised the spectre of an end to Quantitative Easing (QE), raising fears of a reversal of liquidity flows and a rise in interest rates. China s growth concerns and fresh worries of a liquidity crunch as interbank rates spiked added to market woes. Global equity markets, including Greater China, largely shrugged off the negative impact from the US fiscal cliff early in the year as the US economy continued to heal. Events in Europe ranging from the election chaos in Italy to the credit crunch in Cyprus continued to serve as reminders of the lingering effects of the credit crisis that had plagued the region. US Fed chairman Bernanke s statements that the Fed will likely scale back its asset purchase programme later this year triggered profit-taking in the Asian markets. Economic momentum in the Greater China economies weakened from the second quarter of the year, particularly in China. Leading indicators such as the Purchasing Managers Index (PMI) had shown promise in the early part of the year but started to fall off from April. In China, the HSBC PMI unexpectedly fell below 50 from May through June, showing contraction for the first time since the economy was thought to have bottomed in October last year. Other activity indicators such as exports, retail sales and disposable income growth also showed a softening trend, casting doubt on China s recovery. At the same time, China s overall debt levels have been rapidly rising since 2009, especially through non-bank financial channels. The spike in key interbank SHIBOR rates in June triggered fresh fears of a tightened liquidity situation. The China central bank s delay in injecting liquidity raised concerns on its hawkish monetary policy stance and a credit crunch to businesses. In terms of country performance, China was the worst performing, followed by Hong Kong and Taiwan, which registered positive returns over the period. In terms of sector performance, the cyclical Energy, Materials and Industrials sectors were worst-performing; while the more defensive Utilities, Telecoms and Consumer Staples sectors fared better. Information Technology also did well. Outlook and Fund Strategy The Greater China markets will continue to face headwinds from weaker external growth, and a moderation of growth in China. Uncertainty over how the US Fed will step back from its QE program has also heightened market volatility. In China, the key challenges have been a slowing of economic growth momentum even as debt levels rise. Equity valuations seem to have taken most of these concerns into account as the market is now trading at well below the historical average level. Nonetheless, given the economic headwinds, we remain vigilant in tracking operating conditions across the Greater China region. Stock selection is critical given rising competitive pressures. We continue to adopt a quality growth style approach in our stock selection. 3

6 Within China, we avoid policy driven sectors which would be hit by economic restructuring and focus on opportunities that ride on the tailwinds of government initiatives such as in the Consumer, Green Energy, Technology and Internet sectors. In terms of country allocation, we are overweight in Hong Kong and China, and underweight in Taiwan. In terms of sector allocation, we are underweight in the cyclical sectors, particularly Materials and Industrials in the face of China s slowing growth. We are also underweight in Telecoms and Financials which face policy and regulatory headwinds. We are overweight in the Energy and Consumer sectors, which are segments where we see structural growth opportunities. We are also overweight in Information Technology, focusing on the internet and mobile which we view as less susceptible to policy intervention. In our bottom-up stock selection, we focus on companies that are benefitting from the rising purchasing power of the region s consumers. The Greater China markets continue to offer long term attractiveness in providing exposure to a high growth and dynamic part of the world. Rising income in China is creating some unique opportunities for consumer products and services companies, and will continue to do so in the years ahead. North Asia has typically been equated with an export oriented market. This is changing as purchasing power rises. The process of transition will carry challenges. Decelerating growth, both globally and in the region, implies that greater discipline will be required to extract profits and returns. Our focus is to gain leverage to the growth of the region, and China in particular, without being exposed to the challenges linked to the rebalancing process. Our strategy is to focus on structural growth opportunities and to pick high performing companies that will weather through economic and market disruptions. 4

7 B) Investments at fair value and as a percentage of NAV as at 30 June 2013 under review classified by i) Country Fair Value (S$) % of NAV China 41,970, Hong Kong 21,240, Taiwan 24,623, Portfolio of investments 87,835, Other net assets 5,009, Total 92,844, ii) Industry Consumer Discretionary 11,457, Consumer Staples 3,077, Energy 8,975, Financials 29,473, Healthcare 539, Industrials 3,852, Information Technology 19,999, Materials 1,869, Telecommunications Services 5,073, Utilities 3,516, Portfolio of investments 87,835, Other net assets 5,009, Total 92,844, iii) Asset Class Equities 87,835, Other net assets 5,009, Total 92,844, iv) Credit rating of debt securities 5

8 C) Top Ten Holdings The top 10 holdings as at 30 June 2013 and 30 June largest holdings at 30 June 2013 Percentage of total net assets attributable to Fair Value unitholders (S$) % TAIWAN SEMICONDUCTOR MFG CO LTD 6,772, INDUSTRIAL & COMMERCIAL BK OF CHINA - H 3,766, CHINA CONSTRUCTION BANK - H 3,655, AIA GROUP LTD 3,159, CHINA MOBILE LIMITED 3,051, TENCENT HOLDINGS LIMITED 2,930, MEDIATEK INC 2,163, ANTON OILFIELD SERVICES GROUP 2,102, WHARF HOLDINGS 2,024, FAR EASTONE TELECOMMUNICATIONS CO LTD 2,021, largest holdings at 30 June 2012 Percentage of total net assets attributable to Fair Value unitholders (S$) % CHINA MOBILE LIMITED 5,605, TAIWAN SEMICONDUCTOR MFG CO LTD 4,818, CNOOC LTD 4,200, HON HAI PRECISION IND 3,368, INDUSTRIAL & COMMERCIAL BK OF CHINA - H 3,355, CHINA CONSTRUCTION BANK - H 3,276, FAR EASTONE TELECOMMUNICATIONS CO LTD 3,099, TENCENT HOLDINGS LIMITED 2,507, BOC HONG KONG LTD 2,499, CHINA STATE CONSTRUCTION INTERNATIONAL HOLDINGS LTD 2,219,

9 D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2013 ii) net gains/(losses) on derivative contracts realised during the financial period ended 30 June 2013 iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2013 E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2013 F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2013 G) Amount of redemptions and subscriptions for the period 01 January 2013 to 30 June 2013 Total amount of redemptions SGD 17,841,002 Total amount of subscriptions SGD 7,877,432 H) The amount and terms of related-party transactions for the period 01 January 2013 to 30 June 2013 i) As at 30 June 2013 the Fund maintained current accounts with the United Overseas Bank Limited and HSBC Group as follows: United Overseas Bank Limited Bank balances SGD 113,614 HSBC Group Bank balances SGD 5,099,612 7

10 H) The amount and terms of related-party transactions for the period 01 January 2013 to 30 June 2013 (continued) ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2013 Holdings of United Greater China Fund as at 30 June 2013 were as follows:- Affiliated Companies No. of Units Unit Price Market Value SGD SGD (a) UOB Kay Hian Private Limited 2, , (b) UOB Smart Greater China Fund 2,570, ,590, iii) Investment in Initial Public Offerings managed by UOB Group. iv) As at 30 June 2013 there was no brokerage income earned by UOB Kay Hian Pte Ltd. I) Expense ratios 30 June % 30 June % Note: The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). The calculation of the expense ratio at 30 June 2013 was based on total operating expenses of $1,517,675 (2012: $2,215,399) divided by the average net asset value of $100,126,906 (2012: $114,083,106) for the year. The total operating expenses do not include (where applicable) brokerage and other transactions costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios 30 June % 30 June % Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments, being purchases of $42,387,694 (2012: purchases of $60,540,896) divided by the average daily net asset value of $101,274,088 (2012: $108,410,062). K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts 8

11 L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2013 and 30 June 2012 ii) expense ratios for the period ended 30 June 2013 and 30 June 2012 iii) turnover ratios for the period ended 30 June 2013 and 30 June 2012 M) Soft dollar commissions/arrangements UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products and services are received from third parties. The products and services relate essentially to computer hardware and software to the extent that they are used to support the investment decision making process, research and advisory services, economic and political analyses, portfolio analyses including performance measurements, market analyses, data and quotation services, all of which are believed to be helpful in the overall discharge of UOB Asset Management s duties to clients. As such services generally benefit all of UOB Asset Management s clients in terms of input into the investment decision making process, the soft credits utilised are not allocated on a specific client basis. The Manager confirms that trades were executed on a best execution basis and there was no churning of trades. 1 where the underlying scheme is managed by a foreign manager which belongs to the same group of companies as, or has a formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed on the underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readily available to the Singapore manager. 9

12 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2013 (Un-audited) 30 June 30 June $ $ Income Dividends 1,441,904 1,614,435 Less: Expenses Management fee 753, ,768 Trustee fee 20,082 21,621 Audit fee 7,091 7,131 Registrar fee 7,490 7,490 Valuation fee 62,757 67,564 Custody fee 17,836 21,559 Interest expenses - 27 Transaction cost* 479,035 - Other expenses 6, ,281 1,354,107 1,048,441 Net income 87, ,994 Net gains or losses on value of investments Net (loss)/gain on investments (2,191,759) 2,244,904 Net foreign exchange loss (16,829) (119,417) (2,208,588) 2,125,487 Total (deficit)/return for the period before income tax (2,120,791) 2,691,481 Less: Income tax (94,073) (96,090) Total (deficit)/return for the period (2,214,864) 2,595,391 * The Fund has adopted the recommendations of the Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts ( RAP7 ) issued by the Institute of Singapore Chartered Accountants (formerly known as the Institute of Certified Public Accountants of Singapore) in June 2012 for the financial period beginning 1 January In accordance with the RAP7, all expenses relating to the purchase and sale of financial instruments are charged against income. As a transitional provision in the first year of application, reclassification of comparative figures is not required. 10

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2013 (Un-audited) 30 June 31 December $ $ ASSETS Portfolio of investments 87,835, ,148,423 Receivables 781, ,885 Cash and bank balances 5,213,226 3,367,105 Total Assets 93,829, ,377,413 LIABILITIES Purchases awaiting settlement 407, ,139 Payables 577, ,528 Total Liabilities 985,234 1,354,667 EQUITY Net assets attributable to unitholders 92,844, ,022,746 11

14 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 30 June 2013 (Un-audited) 30 June 31 December $ $ Net assets attributable to unitholders at the beginning of financial period/year 105,022, ,435,461 Operations Change in net assets attributable to unitholders resulting from operations (2,214,864) 13,747,177 Unitholders contributions/(withdrawals) Creation of units 7,877,432 9,333,126 Cancellation of units (17,841,002) (23,493,018) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (9,963,570) (14,159,892) Total decrease in net assets attributable to unitholders (12,178,434) (412,715) Net assets attributable to unitholders at the end of financial period/year 92,844, ,022,746 12

15 STATEMENT OF PORTFOLIO As at 30 June 2013 (Un-audited) By Geography - Primary Quoted Equities Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June 30 June 30 June $ % China ANTA SPORTS PRODUCTS LIMITED 530, , ANTON OILFIELD SERVICES GROUP 2,300,000 2,102, BANK OF CHINA 3,750,000 1,943, BAOXIN AUTO GROUP LTD 530, , CHINA CONSTRUCTION BANK - H 4,080,000 3,655, CHINA LIFE INSURANCE CO LTD - H 390,000 1,170, CHINA LONGYUAN POWER GROUP CORP 780,000 1,025, CHINA MOBILE LIMITED 230,000 3,051, CHINA OILFIELD SERVICES LTD - H 566,000 1,401, CHINA OVERSEAS LAND & INVESTMENT LTD 376,000 1,241, CHINA RESOURCES LAND LIMITED 410,000 1,417, CHINA RESOURCES POWER HOLDING 320, , CHINA SHENHUA ENERGY COMPANY LIMITED 235, , CNOOC LTD 930,000 1,998, COSCO PACIFIC 400, , CSR CORP LTD - H 1,620,000 1,202, DONGFENG MOTOR CORPORATION 530, , ENN ENERGY HOLDINGS LTD 146, , HAIER ELECTRONICS GROUP CO LTD 560,000 1,131, HAITONG SECURITIES CO LTD - H 580, , INDUSTRIAL & COMMERCIAL BK OF CHINA - H 4,720,000 3,766, JIANGXI COPPER COMPANY LTD-H 250, , KUNLUN ENERGY COMPANY LTD 700,000 1,570, LENOVO GROUP LIMITED 770, , PETROCHINA COMPANY LIMITED 850,000 1,146, PING AN INSURANCE COMPANY 127,000 1,084, SINOPHARM GROUP CO-H 170, , TENCENT HOLDINGS LIMITED 59,000 2,930, UNI-PRESIDENT CHINA HOLDINGS LTD 850,000 1,095, WANT WANT CHINA HOLDINGS LIMITED 510, , TOTAL CHINA 41,970,

16 STATEMENT OF PORTFOLIO As at 30 June 2013 (Un-audited) By Geography - Primary (continued) Quoted Equities Percentage of total net assets attributable to Holdings at Fair value at unitholders at 30 June 30 June 30 June $ % Hong Kong AAC TECHNOLOGIES HOLDINGS LTD 115, , AIA GROUP LTD 590,000 3,159, BOC HONG KONG LTD 400,000 1,556, CHEUNG KONG 106,000 1,818, GALAXY ENTERTAINMENT GROUP LIMITED 320,000 1,977, HONG KONG & CHINA GAS CO LTD 176, , HONG KONG EXCHANGES & CLEARING 48, , HUTCHISON WHAMPOA 150,000 1,996, MELCO INTERNATIONAL DEVELOPMENT LTD 450,000 1,071, SA SA INTERNATIONAL HOLDINGS LIMITED 1,430,000 1,774, SANDS CHINA LTD 275,000 1,641, SUN HUNG KAI PROPERTIES LTD 85,000 1,385, WHARF HOLDINGS 190,000 2,024, XINYI GLASS HOLDING CO LTD 560, , TOTAL HONG KONG 21,240, TAIWAN ASUSTEK COMPUTER INC 150,000 1,637, CATCHER TECHNOLOGY CO LTD 195,000 1,283, CATHAY FINANCIAL HOLDING 549, , CHENG SHIN RUBBER INDUSTRY CO LTD 350,000 1,392, FAR EASTONE TELECOMMUNICATIONS CO LTD 600,000 2,021, FORMOSA CHEMICAL & FIBRE 185, , FORMOSA PLASTICS CORPORATION 250, , FUBON FINANCIAL HOLDING COMPANY LTD 680,000 1,174, HON HAI PRECISION IND 490,000 1,532, HTC CORPORATION 95, , LITE-ON TECHNOLOGY CORPORATION 460,000 1,014, MEDIATEK INC 148,000 2,163, TAIWAN SEMICONDUCTOR MFG CO LTD 1,455,000 6,772, UNI-PRESIDENT ENTERPRISES CO 435,000 1,073, YUANTA FINANCIAL HOLDING CO LTD 2,000,000 1,316, TOTAL TAIWAN 24,623, Portfolio of investments 87,835, Other net assets 5,009, Net assets attributable to unitholders 92,844,

17 STATEMENT OF PORTFOLIO As at 30 June 2013 (Un-audited) By Geography Primary (Summary) Quoted Equities Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 30 June 31 December % % China Hong Kong Taiwan Portfolio of investments Other net assets Net assets attributable to unitholders

18 STATEMENT OF PORTFOLIO As at 30 June 2013 (Un-audited) By Industry Secondary Quoted Equities Percentage of Percentage of total net assets total net assets attributable to attributable to Fair value at unitholders at unitholders at 30 June 30 June 31 December $ % % Consumer Discretionary 11,457, Consumer Staples 3,077, Energy 8,975, Financials 29,473, Healthcare 539, Industrials 3,852, Information Technology 19,999, Materials 1,869, Telecommunications Services 5,073, Utilities 3,516, Portfolio of investments 87,835, Other net assets 5,009, Net assets attributable to unitholders 92,844,

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