Greater China - January Commentary
Sharukh Malik Portfolio Manager, Asian & Emerging Markets
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Edmund Harriss Director, Chief Investment Officer, Portfolio Manager
This is a marketing communication. Please refer to the prospectus, supplement and KID/KIID for the Funds before making any final investment decisions. Past performance does not predict future returns.
In 2024, the Guinness Greater China Fund rose 6.4% in GBP, while the benchmark MSCI Golden Dragon Index rose by 24.7%. Further performance data is shown below.
The MSCI Golden Dragon's higher weighting to Taiwan, which has grown to c.38%, meant that it captured much more of the rally in Taiwan than the Fund. Compared to mainland Chinese equities, the Fund benefited from stock selection in the Consumer Staples and Consumer Discretionary sectors. Detractors were the underweight position in Tencent, not holding the large state-owned banks in the Financials sector, and no exposure to the Materials, Energy and Utilities sectors.
In this review and outlook we analyse the Fund's performance in detail and report on portfolio changes and positioning.
In our view, each of the sources of equity return present an opportunity for investors. The Fund’s holdings trade at a forward price/earnings ratio of 11.7x, which is well below their 15-year average. This is despite the fact the Fund has minimal exposure to the areas that investors are most cautious on China - real estate and the banks.
(Data from 31/12/08 to 31/12/24, source: Bloomberg, Guinness Global Investors calculations. Historic data for the Fund's current holdings, assuming equal weightings. The Fund was launched on 15.12.2015)
In the long-term, we believe it is earnings growth which is likely to deliver returns for shareholders. Over the past decade, our holdings in aggregate have grown earnings by 8% a year. This compares favourably to the MSCI China Index, where earnings have actually contracted by 1% a year over the past decade. Based on consensus analyst estimates, the Fund’s holdings in aggregate are expected to grow earnings by 12% a year over the next two years, which compares favourably to the 8% projected growth for the MSCI World Index.
Though the Fund does not have a distribution share class, the expected 2024 dividend yield of our companies is 3.0%. In sum, we argue that a combination of a potential valuation re-rating, long term earnings growth and an attractive dividend yield make the Fund compelling for investors.
Looking ahead, we see strengthening messages on further stimulus from the government set against a likely 'wait and see' approach to the new Trump administration. This time, however, China has more tools it can use to retaliate.
Learn more about Guinness Greater China
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The information provided on this page is for informational purposes only. While we believe it to be reliable, it may be inaccurate or incomplete. Any opinions stated are honestly held at the time of publication, but are not guaranteed and should therefore not be relied upon. This content should not be relied upon as financial advice or a recommendation to invest in the Funds or to buy or sell individual securities, nor does it constitute an offer for sale. Full details on Ongoing Charges Figures (OCFs) for all share classes are available here.
The Guinness Greater China Fund is designed to provide investors with exposure to economic expansion and demographic trends in China and Taiwan. The Fund is managed for capital growth and invests in profitable companies generating persistently high return on capital over the business cycle. The Fund is actively managed with the MSCI Golden Dragon used as a comparator benchmark only.
Documentation
The documentation needed to make an investment, including the Prospectus, the Key Information Document (KID) / Key Investor Information Document (KIID) and the Application Form, is available from the website www.guinnessgi.com , or free of charge from:
the Manager: Waystone Management Company (IE) Limited 2nd Floor 35 Shelbourne Road, Ballsbridge, Dublin DO4 A4E0; or, the Promoter and Investment Manager: Guinness Asset Management Ltd, 18 Smith Square, London SW1P 3HZ.
Waystone IE is a company incorporated under the laws of Ireland having its registered office at 35 Shelbourne Rd, Ballsbridge, Dublin, D04 A4E0 Ireland, which is authorised by the Central Bank of Ireland, has appointed Guinness Asset Management Ltd as Investment Manager to this fund, and as Manager has the right to terminate the arrangements made for the marketing of funds in accordance with the UCITS Directive.
Investor Rights
A summary of investor rights in English is available here: https://www.waystone.com/waystone-policies/
Residency
In countries where the Funds are not registered for sale or in any other circumstances where their distribution is not authorised or is unlawful, the Funds should not be distributed to resident Retail Clients. NOTE: THIS INVESTMENT IS NOT FOR SALE TO U.S. PERSONS.
Structure & Regulation
The Fund is a sub-fund of Guinness Asset Management Funds PLC, an open-ended umbrella-type investment company, incorporated in Ireland and authorised and supervised by the Central Bank of Ireland, which operates under EU legislation. The Funds have been approved by the Financial Conduct Authority for sale in the UK. If you are in any doubt about the suitability of investing in these Funds, please consult your investment or other professional adviser.
Switzerland
This is an advertising document. The prospectus and KID for Switzerland, the articles of association, and the annual and semi-annual reports can be obtained free of charge from the representative in Switzerland: Reyl & Cie SA, Ru du Rhône 4, 1204 Geneva. The paying agent is Banque Cantonale de Genève, 17 Quai de l'Ile, 1204 Geneva.
Singapore
The Fund is not authorised or recognised by the Monetary Authority of Singapore (“MAS”) and shares are not allowed to be offered to the retail public. The Fund is registered with the MAS as a Restricted Foreign Scheme. Shares of the Fund may only be offered to institutional and accredited investors (as defined in the Securities and Futures Act (Cap.289)) (‘SFA’) and this material is limited to the investors in those categories.