Attached files
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| 8-K - 8-K - CHINA FUND INC | v332500_8k.htm |
| Monthly Insight | |
| DEC 31, 2012 | |
| The China Fund, Inc. (CHN) |
Investment Objective
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.
Performance Overview
| 3 Years | 5 Years | 10 Years | Since | |||||||||||||||||||||||||||||
| Performance History | 1 month | 3 months | YTD | 1 Year | (p.a.) | (p.a.) | (p.a.) | Inception | ||||||||||||||||||||||||
| NAV (%) | 4.35 | 5.75 | 12.07 | 12.07 | 2.55 | -0.22 | 18.66 | 10.75 | ||||||||||||||||||||||||
| Market price (%) | 9.42 | 10.84 | 20.46 | 20.46 | 2.58 | 1.98 | 19.67 | 10.03 | ||||||||||||||||||||||||
| Benchmark (%) | 2.76 | 7.78 | 22.65 | 22.65 | 4.39 | -0.76 | 13.25 | N/A | ||||||||||||||||||||||||
| Performance History | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||||||||||
| NAV (%) | 12.07 | -24.37 | 27.25 | 72.82 | -46.95 | 86.20 | 57.10 | 6.09 | ||||||||||||||||||||||||
| Market price (%) | 20.46 | -27.51 | 23.60 | 72.19 | -40.65 | 50.24 | 65.67 | -21.51 | ||||||||||||||||||||||||
| Benchmark (%) | 22.65 | -18.36 | 13.60 | 67.12 | -49.37 | 37.97 | 39.50 | 10.27 | ||||||||||||||||||||||||
Source : State Street Bank and Trust Company. Source for index data: MSCI as at December 31, 2012.
Portfolio Analysis
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| Source : State Street Bank and Trust Company as at December 31, 2012. | * China includes A-shares (4.8%), A-share equity linked securities (8.2%), B-shares (0.0%), H-shares (12.0%) and Red-chips (17.2%). |
The China Fund, Inc. (CHN)
Portfolio Analysis (continued)
| Top 10 Holdings | Sector | % | Direct Investments | Sector | % | |||||||||
| INDUSTRIAL & COMMERCIAL BANK OF CHINA | FINANCIALS | 5.9 | GOLDEN MEDITECH HOLDINGS, LTD. 15.0%, 5/16/13 | OTHERS | 1.55 | |||||||||
| TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. | I.T. | 5.6 | GOLDEN MEDITECH HOLDINGS, LTD. 15.0%, 11/16/13 | OTHERS | 1.55 | |||||||||
| HAND ENTERPRISE SOLUTIONS CO., LTD. | I.T. | 4.8 | ||||||||||||
| SUN HUNG KAI PROPERTIES, LTD. | FINANCIALS | 4.6 | ||||||||||||
| CHINA MOBILE, LTD. | TELECOM | 3.9 | ||||||||||||
| CHINA EVERBRIGHT INTERNATIONAL, LTD. | INDUSTRIALS | 3.8 | ||||||||||||
| DIGITAL CHINA HOLDINGS, LTD. | I.T. | 3.4 | ||||||||||||
| CNOOC, LTD. | ENERGY | 3.3 | ||||||||||||
| CHINA MEDICAL SYSTEM HOLDINGS, LTD. | HEALTH CARE | 2.9 | ||||||||||||
| PING AN INSURANCE , LTD. | FINANCIALS | 2.8 | ||||||||||||
| Total | 41.0 | Total | 3.1 | |||||||||||
Source : State Street Bank and Trust Company as at December 31, 2012.
Fund Details
| NAV | $22.58 |
| Market price | $21.41 |
| Premium/Discount | -5.18% |
| Market cap | US$341.1m |
| Shares outstanding | 15,932,408 |
| Exchange listed | NYSE |
| Listing date | July 10, 1992 |
| Benchmark | MSCI Golden Dragon Index (Total Return) |
| Fund Manager | Christina Chung |
| Listed and direct investment manager | RCM Asia Pacific Limited |
Source : State Street Bank and Trust Company as at December 31, 2012.
Dividend History (10 years)
| Declaration | Ex-dividend | Long-term | Short-term | |||||||||||||||||||
| date | date | Record date | Payable date | Dividend/Share | Income | Capital | Capital | |||||||||||||||
| 10 Dec 2012 | 20 Dec 2012 | 24 Dec 2012 | 28 Dec 2012 | 3.2517 | 0.3473 | 2.9044 | 0.0000 | |||||||||||||||
| 8 Dec 2011 | 21 Dec 2011 | 23 Dec 2011 | 29 Dec 2011 | 2.9964 | 0.1742 | 2.8222 | 0.0000 | |||||||||||||||
| 8 Dec 2010 | 21 Dec 2010 | 24 Dec 2010 | 29 Dec 2010 | 2.2742 | 0.3746 | 1.8996 | 0.0000 | |||||||||||||||
| 9 Dec 2009 | 22 Dec 2009 | 24 Dec 2009 | 29 Dec 2009 | 0.2557 | 0.2557 | 0.0000 | 0.0000 | |||||||||||||||
| 8 Dec 2008 | 22 Dec 2008 | 24 Dec 2008 | 23 Jan 2009 | 5.8174 | 0.4813 | 5.3361 | 0.0000 | |||||||||||||||
| 7 Dec 2007 | 19 Dec 2007 | 21 Dec 2007 | 25 Jan 2008 | 12.1200 | 0.2800 | 9.0000 | 2.8400 | |||||||||||||||
| 8 Dec 2006 | 19 Dec 2006 | 21 Dec 2006 | 29 Dec 2006 | 4.0117 | 0.2996 | 2.7309 | 0.9812 | |||||||||||||||
| 9 Dec 2005 | 19 Dec 2005 | 21 Dec 2005 | 29 Dec 2005 | 2.5119 | 0.2172 | 2.2947 | 0.0000 | |||||||||||||||
| 13 Dec 2004 | 20 Dec 2004 | 22 Dec 2004 | 7 Jan 2005 | 3.5701 | 0.1963 | 3.2664 | 0.1074 | |||||||||||||||
| 19 Dec 2003 | 29 Dec 2003 | 31 Dec 2003 | 15 Jan 2004 | 1.7800 | 0.0700 | 0.6700 | 1.0400 | |||||||||||||||
Source : State Street Bank and Trust Company as at December 31, 2012
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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 December 31, 2012.
The China Fund Inc. Premium / Discount
Past performance is not a guide to future returns.
Source : State Street Bank and Trust Company as at December 31, 2012.
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The China Fund, Inc. (CHN)
Manager’s Commentary
Market review
In December, the Hong Kong equity market ran strongly on the back of continued fund inflows and the sharp rally of the China onshore equity market, although uncertainty over the US budget weighed on market sentiment towards the end of the month. The Chinese economy showed some early signs of stabilization in the fourth quarter 2012, led by the recovery of the housing market, dissipating effects from destocking and accelerated infrastructure project approvals by the Chinese government since the third quarter of 2012. Political and policy concerns were alleviated to a certain extent by the smooth leadership transition and subsequent unveiling of policy objectives.
Fund review
In December, the Fund outperformed relative to the benchmark mainly due to stock selection in the information technology and financial sectors.
The top contributor for the month was Ping An Insurance. The share price was supported by the strong rally in the A-share market in December, which should benefit the investment return of the life insurance company. Amongst the detractors, Taiwan Familymart underperformed mainly due to the market shifting out from defensive plays during the strong rally in December. Other key detractors were white liquor stocks whose share prices plummeted, driven by negative news flow regarding allegations that the liquors contain toxic plasticizers that produce various health risks. In addition, the announcement of a prohibition on the consumption of liquor in receptions for high-ranking military officers further dampened investors‘ sentiment.
Outlook
We believe China equities are likely to continue its recovery in the short term as expectations of a cyclical improvement for the China economy coupled with potential economic reform measures and a pickup in corporate earnings will continue to drive the normalization of market valuations.
Source: RCM Asia Pacific Limited as at December 31, 2012.
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The China Fund, Inc. (CHN)
Portfolio Holdings
| Percentage of | ||||||||||||||||||
| CUSIP | Security Description | Cost Base | Base MV | Shares | Net Assets | |||||||||||||
| B1G1QD902 | Industrial & Commercial Bank of China | 20,739,449.00 | 21,166,783.00 | 29,829,000 | 5.9 | |||||||||||||
| 688910900 | Taiwan Semiconductor Manufacturing Co., Ltd. | 16,072,089.00 | 20,322,600.00 | 6,084,000 | 5.6 | |||||||||||||
| B3VN92906 | HAND Enterprise Solutions Co., Ltd. | 1,793,494.00 | 17,216,828.00 | 6,369,715 | 4.8 | |||||||||||||
| 685992000 | Sun Hung Kai Properties, Ltd. | 14,524,567.00 | 16,427,620.00 | 1,092,000 | 4.6 | |||||||||||||
| 607355906 | China Mobile, Ltd. | 12,606,802.00 | 13,867,956.00 | 1,191,000 | 3.9 | |||||||||||||
| 663094902 | China Everbright International, Ltd. | 12,183,629.00 | 13,518,811.00 | 26,730,000 | 3.8 | |||||||||||||
| 635186901 | Digital China Holdings, Ltd. | 13,205,899.00 | 12,394,777.00 | 7,256,000 | 3.4 | |||||||||||||
| B00G0S903 | CNOOC, Ltd. | 11,883,847.00 | 12,008,910.00 | 5,547,000 | 3.3 | |||||||||||||
| B6WY99909 | China Medical System Holdings, Ltd. | 978,759.00 | 10,355,550.00 | 13,377,300 | 2.9 | |||||||||||||
| 913BMZ902 | Ping An Insurance (Group) Company of China, Ltd. Access Product (expiration 04/01/13) | 9,494,979.00 | 10,217,738.00 | 1,418,047 | 2.8 | |||||||||||||
| 633393905 | Enn Energy Holdings, Ltd. | 606,420.00 | 9,597,074.00 | 2,204,000 | 2.7 | |||||||||||||
| 619376908 | China Resources Land, Ltd. | 5,946,868.00 | 9,375,987.00 | 3,436,000 | 2.6 | |||||||||||||
| 674842901 | Ruentex Development Co., Ltd. | 3,423,335.00 | 9,094,487.00 | 4,416,301 | 2.5 | |||||||||||||
| 644094906 | Taiwan FamilyMart Co., Ltd. | 1,631,072.00 | 8,930,887.00 | 1,942,652 | 2.5 | |||||||||||||
| B2R2ZC908 | CSR Corp., Ltd. | 7,466,210.00 | 8,635,005.00 | 9,930,000 | 2.4 | |||||||||||||
| B01CT3905 | Tencent Holdings, Ltd. | 6,391,568.00 | 7,505,713.00 | 234,200 | 2.1 | |||||||||||||
| 17313A533 | Gree Electric Appliances, Inc. Access Product (expiration 01/17/14) | 6,453,442.00 | 7,458,981.00 | 1,838,546 | 2.1 | |||||||||||||
| B1YMYT902 | Hiwin Technologies Corp. | 9,693,067.00 | 6,915,037.00 | 942,750 | 1.9 | |||||||||||||
| 99ZMCS903 | Kweichow Moutai Co., Ltd. Access Product (expiration 10/26/15) | 7,383,669.00 | 6,808,851.00 | 204,751 | 1.9 | |||||||||||||
| 670039007 | Uni-President Enterprises Corp. | 1,090,258.00 | 6,731,574.00 | 3,667,508 | 1.9 | |||||||||||||
| 634007900 | Kunlun Energy Co., Ltd. | 5,034,471.00 | 6,509,202.00 | 3,122,000 | 1.8 | |||||||||||||
| 643648900 | Shenzhen International Holdings, Ltd. | 3,714,750.00 | 6,447,973.00 | 60,947,500 | 1.8 | |||||||||||||
| 34415V109 | Focus Media Holding, Ltd. | 5,976,531.00 | 6,431,222.00 | 250,437 | 1.8 | |||||||||||||
| 637248907 | MediaTek Inc. | 6,194,126.00 | 6,227,367.00 | 559,000 | 1.7 | |||||||||||||
| 629099904 | WT Microelectronics Co., Ltd. | 5,796,850.00 | 5,991,426.00 | 4,819,530 | 1.7 | |||||||||||||
| 671815900 | Qingling Motors Co., Ltd. | 7,603,282.00 | 5,960,025.00 | 24,836,000 | 1.7 | |||||||||||||
| 626073902 | Delta Electronics, Inc. | 4,550,608.00 | 5,922,983.00 | 1,615,000 | 1.6 | |||||||||||||
| 986PLF007 | Golden Meditech Holdings, Ltd.15.0%, 05/16/13 | 5,557,209.00 | 5,557,926.00 | 58,222,500^ | 1.6 | |||||||||||||
| 986PLG005 | Golden Meditech Holdings, Ltd.15.0%, 11/16/13 | 5,557,209.00 | 5,557,926.00 | 58,222,500^ | 1.5 | |||||||||||||
| 959GRNII9 | Taiwan Life Insurance Co., Ltd., 4.0%, 12/28/14 | 6,178,274.00 | 5,527,014.00 | 200,000,000 | 1.5 | |||||||||||||
| 620267906 | Advantech Co., Ltd. | 4,104,779.00 | 5,416,509.00 | 1,284,000 | 1.5 | |||||||||||||
| 651795908 | Natural Beauty Bio-Technology, Ltd. | 4,906,910.00 | 4,924,395.00 | 47,710,000 | 1.4 | |||||||||||||
| 644806002 | Hutchison Whampoa, Ltd. | 4,088,916.00 | 4,728,247.00 | 453,000 | 1.3 | |||||||||||||
| 626735906 | Hong Kong Exchanges and Clearing, Ltd. | 4,018,117.00 | 4,375,225.00 | 257,100 | 1.2 | |||||||||||||
| B633D9904 | Zhongsheng Group Holdings, Ltd. | 3,466,065.00 | 4,032,084.00 | 2,662,000 | 1.1 | |||||||||||||
| 665157905 | Comba Telecom Systems Holdings, Ltd. | 7,565,579.00 | 3,944,653.00 | 10,958,500 | 1.1 | |||||||||||||
| 600245005 | ASM Pacific Technology, Ltd. | 4,294,518.00 | 3,937,075.00 | 323,600 | 1.1 | |||||||||||||
| B3ZVDV905 | Sinopharm Group Co., Ltd. | 2,527,529.00 | 3,791,995.00 | 1,212,000 | 1.1 | |||||||||||||
| B1JNK8908 | China Coal Energy Co., Ltd. | 4,377,475.00 | 3,698,986.00 | 3,405,000 | 1.0 | |||||||||||||
| 643055908 | Golden Meditech Holdings, Ltd. | 4,555,715.00 | 3,571,451.00 | 35,040,000 | 1.0 | |||||||||||||
| B1CKXF901 | Zhengzhou Yutong Bus Co., Ltd. Access Product (expiration 01/20/15) | 3,096,799.00 | 3,309,305.00 | 825,469 | 0.9 | |||||||||||||
| B4PTR3906 | Fook Woo Group Holdings, Ltd. | 7,974,083.00 | 2,237,200.00 | 25,314,000 | 0.6 | |||||||||||||
| 17307D865 | Kweichow Moutai Co., Ltd. Access Product (expiration 01/20/15) | 1,597,638.00 | 1,559,546.00 | 46,898 | 0.4 | |||||||||||||
| B05LP6908 | CDW Holding, Ltd. | 333,636.00 | 929,022.00 | 11,348,000 | 0.3 | |||||||||||||
| 631349909 | Chaoda Modern Agriculture (Holdings), Ltd. | 9,287,936.00 | 0.00 | 26,651,357 | 0.0 | |||||||||||||
| 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 December 31, 2012.
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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.
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