HFT (HK) China Investment Series II. HFT (HK) China High Yield Bond Fund

Transcription

1 HFT (HK) China High Yield Bond Fund INTERIM REPORT (UNAUDITED) FOR THE PERIOD ENDED 30 June 2018

2 MANAGER HFT Investment Management (HK) Limited ("HFT HK") HFT HK is the Hong Kong-based subsidiary and international arm of HFT Investment Management Co., Ltd. HFT HK offers a wide range of China and Greater China investment strategies. HFT Investment Management Co., Ltd. ( HFT ) Shanghai-based HFT is the only Chinese-based Asset Manager that has Fitch rating Highest standards (CHN) (February 2018). HFT is an asset management company in mainland China; a joint-venture between Haitong Securities and BNP PARIBAS ASSET MANAGEMENT Asia Limited. Its domestic activities span mutual funds, investment advisory and enterprise annuities & segregated accounts. Its investment team covers equity, fixed income and money market instruments. HFT s Fixed Income capabilities include domestic mutual funds, enterprise annuities & mandates and QFII products. Bond management at HFT started in 2003 and has expanded steadily over the years to reach billion as of June FUND INFORMATION Manager: Trustee: Custodian: Dealing frequency: Base currency: Financial year end: HFT Investment Management (HK) Limited BNP Paribas Trust Services (Hong Kong) Limited BNP Paribas Securities Services, operating through its Singapore Branch Daily 31 December -1-

3 CONTENTS Page(s) Administration 3-4 Report of Manager 5 Statement of Assets and Liabilities (Unaudited) 6 Statement of Comprehensive Income (Unaudited) 7 Statement of Changes in Net Assets Attributable to Unitholders (Unaudited) 8 Units in Issue (Unaudited) 9 Statement of Movements in Portfolio Holdings (Unaudited) 10 Investment Portfolio (Unaudited)

4 Administration Manager HFT Investment Management (HK) Limited Suite 4004, 40/F, Two Exchange Square 8 Connaught Road Central Hong Kong Directors of the Manager Mr. DING Yuchao (Appointed on 01 February 2018). Mr. MENG Ning Mr. TAO Wangxiong Mr. XI Wanrong Ms. ZHANG Ming Mr. ZHANG Wenwei Trustee BNP Paribas Trust Services (Hong Kong) Limited 21/F, PCCW Tower Taikoo Place 979 King s Road Quarry Bay Hong Kong Registrar & Transfer Agent BNP Paribas Securities Services, operating through its Hong Kong Branch 21/F, PCCW Tower Taikoo Place 979 King s Road Quarry Bay Hong Kong Global Custodian and Administrator BNP Paribas Securities Services, operating through its Singapore Branch 20 Collyer Quay #01-01 Singapore

5 Administration (continued) RQFII Custodian Industrial and Commercial Bank of China Limited No. 55 Fuxingmennei Street Xicheng District Beijing People's Republic of China Auditors KPMG 8th Floor, Prince's Building 10 Chater Road Central Hong Kong Legal Counsel to the Manager Deacons 5/F, Alexandra House 18 Chater Road Central Hong Kong -4-

6 REPORT OF MANAGER The bond market has been very mixed in the first half of 2018, with the bull of interest rate bonds and occurrence of credit differentiation. As the policy of de-leveraging is continuing, domestic economy remained stable with mild inflation, but the growth momentum turned weak. The industrial production was relatively prosperous in the first half, the manufacturing investment slightly rebounded due to improving profits in the up-and-mid stream industries. However, the infrastructure and real estate investment extracted mainly dragged by restrictions on financing channels and non-standard asset investment. Growth in social financing slowed down as well and strict credit policies began to add pressures on the real economy. Besides, the trade conflicts between the U.S. and China still lingered and external changes added uncertainties on domestic economy. Under current situation, the PBOC decided to change the monetary policy to neutral and slightly loose and conduct more targeted RRR cuts, enhancing financing support for small and micro businesses. Liquidity was stable in general and the risk-free interest rate displayed downward trend with volatilities. In the past half year, yields for 10Y T-bond and 10Y CDB bond went down 41bps and 57bps respectively. Credit differentiation occurred in the credit bond market, defaults of quasi-municipal nonstandard product happened as well as private enterprise bonds, risk preference significantly dropped and credit spreads widened as a result. China s total social financing, a broad measure of credit and liquidity in the economy, dropped sharply to billion in May from 1.56 trillion in April. May also marked the lowest monthly figure over the past year. The decline was primarily attributable to shrinking off-balance sheet lending as a result of crackdown on shadow financing. Financing from bond issuance turned negative in May, reflecting weak sentiment in onshore bond market. We are mindful of spill over effect of tighter liquidity to broader economy and balance sheet of bond issuers. Our cautious stance in prevailing environment remained unchanged. We prefer short dated papers and focus more on bonds issued by state owned enterprises or private sector companies which are leaders in respective industries and with solid fundamentals. HFT Investment Management (HK) Limited 31 August

7 STATEMENT OF ASSETS AND LIABILITIES (Unaudited) As at 30 June 2018 As at 30 June 2018 As at 31 December 2017 Assets Cash and cash equivalents 881, ,192 Financial assets at fair value through profit or loss 14,820,800 15,382,070 Interest receivable 471, ,418 Prepayment and other receivables 2, ,414 Total assets 16,177,544 16,583,094 Liabilities Due to unitholders - 89,345 Accrued expenses and other payables 269, ,287 Tax payables 44,908 46,605 Total liabilities 314, ,237 Net assets attributable to unitholders 15,863,297 16,022,857 Number of units in issue - Class A units 172, ,381 - Class D units Net asset value per unit - Class A units Class D units * The difference between net assets attributable to unitholders and recalculated net assets (number of units in issues times net asset value per unit) is due to rounding. -6-

8 STATEMENT OF COMPREHENSIVE INCOME (Unaudited) For the period ended 30 June 2018 Period from 01 January 2018 to 30 June 2018 Period from 01 January 2017 to 30 June 2017 Income Interest income 426, ,242 Net gains/(losses) from financial assets at fair value through profit or loss 10,218 (401,407) Net foreign exchange gains Other income 250, ,139 Total revenue 687, ,090 Management fee 98, ,457 Trustee fee 4,736 5,124 Custodian fee 13,086 9,225 Auditors' remuneration 56,942 67,492 Transaction costs 3,783 3,496 Other operating expenses 210, ,303 Total operating expenses 387, ,097 Income before distributions to unitholders 299,496 (182,007) Distributions to unitholders (364,199) (386,041) Decrease in net assets attributable to unitholders before tax (64,703) (568,048) Taxation (53,615) (30,782) Decrease in net assets attributable to unitholders and total comprehensive income for the period (118,318) (598,830) -7-

9 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (Unaudited) For the period ended 30 June 2018 Period from 01 January 2018 to 30 June 2018 Period from 01 January 2017 to 30 June 2017 (Restated) Unitholders net assets at the beginning of the period/year 16,022,857 18,263,491 Transactions with unitholders Subscriptions of units 94,013 90,355 Redemption of units (135,255) (770,849) Total transactions with unitholders (41,242) (680,494) Decrease in net assets attributable to unitholders and total comprehensive income for the period/year (118,318) (598,830) Unitholders net assets at the end of the period/year 15,863,297 16,984,167-8-

10 UNITS IN ISSUE (Unaudited) For the period ended 30 June 2018 Class A Class D Balance at 01 January , Subscriptions of units during the period 1,025 - Redemption of units during the period (1,471) - Balance at 30 June , Class A Class D Balance at 01 January ,078 1,685 Subscriptions of units during the year Redemption of units during the year (7,986) - Balance at 30 June ,037 1,685-9-

11 STATEMENT OF MOVEMENTS IN POTFOLIO HOLDINGS (Unaudited) For the period ended 30 June 2018 % of net asset value as at 30 June 2018 % of net asset value as at 31 December 2017 Debt securities - listed bonds Other net assets Total net assets

12 INVESTMENT PORTFOLIO (Unaudited) As at 30 June 2018 Debt Securities Bonds China Nominal Value Market value % of net assets Listed/Quoted debt securities China Beijing Haohua Energy Resource Company Limited 5.5% due 26/03/ , , China Government Bond 4.26% due 31/07/2021 1,300,000 1,328, China Jushi Company Limited 5.56% due 17/10/ , , China Railway Group Limited 4.88% due 27/01/2020 1,000,000 1,004, Greentown Real Estate Group Company Limited 4.4% due 16/09/2020 1,000, , Guangzhou Automobile Group Company Limited 4.7% due 19/01/2020 1,000, , Hubei Xingfa Chemicals Group Company Limited 5.2% due 20/08/2020 1,000, , Kailuan Energy Chemical Company Limited 5.4% due 30/10/2019 1,000, , Kangmei Pharmaceutical Company Limited 5.33% due 27/01/ , , Ningbo Asia Pulp & Paper Company Limited 6.38% due 24/08/2021 1,000, , Shandong Nanshan Aluminum Company Limited 4.97% due 25/09/2020 1,000,000 1,001, Shanghai Industrial Development Company Limited 5.69% due 23/03/2020 1,000,000 1,012, Shanying International Holding Company Limited 7.5% due 22/08/ , ,

13 INVESTMENT PORTFOLIO (Unaudited) As at 30 June 2018 Debt Securities (continued) Bonds (continued) China (continued) Nominal Value Market value % of net assets Listed/Quoted debt securities (continued) Sinochem International Corporation 4.99% due 05/03/2019 1,000,000 1,002, Xiamen C&D Corporation Limited 7.3% due 28/10/2019 1,000,000 1,032, Xinjiang Joinworld Company Limited 6.85% due 17/11/ , , ,820, Total Listed/Quoted debt securities 14,820, OTHER NET ASSETS 1,042, TOTAL NET ASSETS AS AT 30 JUNE ,863, TOTAL INVESTMENTS, AT COST 14,957,

14 DISCLAIMER HFT (HK) China High Yield Bond Fund ( the sub-fund ), a sub-fund of the HFT (HK) China Investment Series II, has been authorized by the SFC; however, such authorization is not an official recommendation or endorsement of the Fund nor does it guarantee the commercial merits of the sub-fund or its performance. It does not mean the sub-fund is suitable for all investors nor is it an endorsement of its suitability for any particular investor or class of investors. This material has not been reviewed by the SFC. This publication does not constitute an offer or solicitation of any transaction in any securities referred to herein. The content of this publication does not constitute investment advice to any person. Any recommendation contained herein may not be suitable for all investors. Although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. This HFT Investment Management (HK) Limited publication and any recommendation contained herein speak only as of the date hereof and are subject to change without notice. HFT Investment Management (HK) Limited has no obligation to update or amend any information contained herein. This publication is being furnished to you for informational purposes only and on the condition that it will not form a primary basis for any investment decision. Investors must make their own determination of the appropriateness of an investment in any securities referred to herein based on the legal, tax and accounting considerations applicable to such investors and their own investment strategy. By virtue of this publication, neither HFT Investment Management Co., Ltd or HFT Investment Management (HK) Limited, nor any of their employees shall be responsible for any investment decision. -13-

15 HFT Investment Management (HK) Limited Suite 4004, 40/F, Two Exchange Square 8 Connaught Road Central Hong Kong T: F: E:info.hk@hftfund.com Visit our website