Volatile markets make for a difficult year for JPMorgan Chinese- JPMorgan Chinese (JMC) announced yesterday that the fund’s NAV total return for the year was down 1.4%. The benchmark, the MSCI China Index, had a NAV total return of +0.6%. The total return for shareholders for the year fell by 5.0%. Gearing, which averaged 14%, did not help as it contributed negatively to returns as the company did not expect the fall that markets took during the second half of the year.
Revenue per share on the year was 4.32 pence which is up from 2017s revenue per share of 1.16 pence. The dividend has increased for the year going from 1.6 pence in 2017 to 3.5 pence in 2018. The increase in the dividend is a result of the change of the allocation of expenses. After the fund changed its benchmark to the MSCI China Index, the board decided to allocate expenses between 75% capital and 25% income. In order for the fund to maintain its investment trust status they had to increase dividend paid out.
Howard Wang and Rebecca Jiang, investment managers for JPMorgan Chinese, had this to say about the outlook of the fund:
“One of the great unknowns at the time of writing is just how the US-China trade war is going to play out. Whatever happens, the likelihood is that Chinese exports will face tougher times ahead and Chinese economic growth will continue to moderate further. We believe, however, that the decline is likely to be both modest and controlled, as targeted and coordinated policy responses by the Chinese government should offset growth headwinds resulting from the financial deleveraging efforts and the ongoing trade war. Beijing’s reforms reflect the changing economic landscape at home, acknowledging that the pendulum has shifted and targeting effort on reforms to minimise the impact of external challenges. The increased emphasis on domestic demand and a consumer-led recovery leading to less dependence on export growth should counteract the adverse effects of any further trade escalations with the US as well as the risks of higher inflation and slower global growth. Our research focus remains on “New China” companies and sectors that are capitalising on the transition of the country to a more consumer-driven economy. Being on the ground in mainland China is a significant advantage for us. We acknowledge that Chinese stocks have been hit hard over recent months, reflecting negative news flow, volatility and US Dollar strength but are reassured that interest in the domestic market from foreign investors has remained strong. We continue to adopt a patient, long-term approach to investing as we believe this offers the Company’s shareholders the best likelihood of benefiting from the economic transformation of China and its evolving role as a global economic powerhouse. There will always be short-term uncertainties that threaten to derail performance but the long-term case for China remains robust. We are excited by the prospect of discovering many more interesting investment opportunities that will benefit from the growth of the Chinese domestic market. Above all, we still believe that investing in Chinese equities can deliver positive and sustained returns over the long-term.”
JMC- Volatile markets make for a difficult year for JPMorgan Chinese