Fund in Focus: JP Morgan China A-share Opportunities

By: Unit Trust Marketing & Research Team
All data as of end Jul 2021 unless otherwise stated

  • China widened its tech crackdown in end July, unveiling an overhaul of the tech education sector, leaving affected companies scrambling to pivot their business to survive under the new rules. Under the new regulations, companies that teach the school curriculum from making profits, raising capital, and going public, The regulatory overhaul sparked widespread fears amongst investors that the crackdown would soon spread to other sectors.
  • The NASDAQ Golden Dragon China Index, which comprises of companies whose common stock is publicly traded in the United States whose main economic activity is in China, have lost 24.8% of its value from the beginning of the year to end July 2021.
  • We believe that even though, Chinese companies could face headwinds in the short term, eventually the crackdown on China’s big tech companies will wind down.

Our Recommended Fund: JP Morgan China A-Share Opportunities

Multi-sector diversification. The fund is diversified across 8 main sectors, providing protection to investors worried on the short term regulatory crackdown. 21.3% is allocated to the industrials sector which is positioned to prosper as the wider economy recovers from the coronovirus-led recession.

Tap into long-term structural trends. Consumption upgrades, technology innovation, and healthcare provision deepening remain key long-term growth drivers.In all, the fund has a total of 59.7% allocated to these sectors – Information Technology (21.8%), Consumer Staples (15.3%), Consumer Discretionary (9.6%), and Healthcare (13.0%)

High conviction, growth oriented approach. The fund focuses on identifying 50-70 high quality companies listed on the Shanghai and Shenzhen stock exchanges to capture long-term capital growth.The strategy takes into consideration all capitalizations.

The JPM China A-share Opportunity fund has lost -4.84% year-to-date to end July. Its largest drawdown in the past 1 year was -11.06% occurring from the beginning of February to end March. Nonetheless, the fund has still recorded a 20.8% cumulative return over the past 1 year to end July 2021.
Source: Morningstar, as of end Jul 2021

Disclaimer: The information and materials contained in this document are provided strictly for information purposes only and should not be considered an offer, recommendation or solicitation, to deal in or enter into any investments or funds. The information and materials are not to be relied on as investment, legal, tax, regulatory or other advice, as they do not take into account the investment objectives, financial situation or particular needs of any specific investor. Any research or analysis used to derive, or in relation to, the information and materials herein have been procured by UOB Kay Hian for its own use, and may have been acted on for its own purpose. The information and materials herein, including any opinions or forecasts have been obtained from or are based on sources believed by UOB Kay Hian to be reliable, but UOB Kay Hian does not represent or warrant the accuracy, adequacy, timeliness or completeness of the same, and expressly disclaims liability for any errors or omissions.As such, any person acting upon or in reliance of these information and materials does so entirely at his or her own risk. Past performance is not necessarily indicative of future performance. Any projections or other forward-looking statements regarding future events or performance of countries, markets or companies are [intended only to illustrate hypothetical results and) not necessarily indicative of, and may differ from, actual events, performance or results. No warranty whatsoever, expressed or implied, is given and no liability whatsoever is accepted by UOB Kay Hian or its affiliates, for any loss to anyone, arising directly or indirectly, from the use of this document or  any action or omission made in reliance of any information, opinion or projection contained herein.This document is not directed to or intended for distribution to or use by any person or any entity located in a jurisdiction where it would be contrary to applicable law or otherwise trigger a financial services licensing requirement.  The information and materials herein shall not be disclosed, used or disseminated, in whole or part, and shall not be reproduced, copied or made available to others for any purpose. UOB Kay Hian reserves the right to make changes to the information and materials, including any opinions or forecasts expressed herein at any time, without notice.

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