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China’s double pivot — A major shift in China’s COVID and property sector policies

28 November 2022

Paula Chan, Senior Portfolio Manager, Asia Fixed Income

Isaac Meng, Portfolio Manager, Asia Fixed Income

Mainland China (China) recently announced a raft of policy support measures to ease COVID-related curbs, bolster financing and the property sector. Paula Chan, Senior Portfolio Manager, Asia Fixed Income, and Isaac Meng, Portfolio Manager, Asia Fixed Income, see opportunities in China credits amid the government’s property market support. They view the latest measures positively, which point to China’s economic reopening and eventual recovery of its property sector.

China recently announced a raft of policy support measures to ease COVID-related curbs, and bolster financing support with a focus on the property sector. Here are the key measures announced:

1. Adjustments to Covid-related restrictions

On 11 November, China announced 20 measures to fine-tune its zero-COVID policy.1 The seven-member Standing Committee of the Politburo of the Chinese Communist Party, China’s top decision-making body, held a meeting to discuss measures aimed at improving the country’s COVID controls.

Key announcements included:

  • A shortening of the quarantine requirement for close contacts and inbound travellers to five days of quarantine and three days of home monitoring. This replaces seven days of quarantine and three days of home monitoring.
  • A suspension of the "circuit-breaking" mechanism for inbound flights.
  • Restrictions on the unscientific approach of conducting two-to-three PCR tests per day.
  • Local officials will be held accountable for unnecessary control measures, such as suspending face-to-face classes and production, implementing traffic controls, and introducing arbitrary lockdowns.

While the default “dynamic COVID-zero policy” remains essentially unchanged, the Standing Committee asked the government to fine-tune its approach to COVID-control policies in a more “scientific and precise” way.2

2. Financing support for the property sector

On 9 November, the National Association of Financial Market Institutional Investors (NAFMII), together with the People’s Bank of China (PBoC), announced that a RMB250 billion funding facility (“the second arrow”) would provide support for private corporate-bond financing.3 This includes the purchase of property-developer bonds in both the primary and secondary markets. The RMB250 billion package, which can be increased if required, equates to roughly one-third of all private developers’ outstanding onshore and offshore bonds maturing in the next 12 months. In total, property sector bailouts have added up to about RMB600 billion, which is close to meeting the short-term liquidity needs of the sector.

On 21 November, the PBoC announced plan to issue RMB200 billion interest-free relending loans to six commercial banks through 31 March 2023, in an aim to help ensure delivery of unfinished property projects.

Also, on 23 November, the PBoC and China Banking and Insurance Regulatory Commission (CBIRC) officially issued a notice with 16 measures that will support financing for the property sector.4 The focus will be on developer loans to promote stability and the healthy development of the housing sector. In contrast to previous piecemeal announcements, the measures take a more comprehensive and concerted approach to addressing the financing needs of developers – the policies include guaranteed bond issuance, developer loans, trust loans, mortgages, and acquisition loans.

Regulators also called on financial institutions to support the extension of maturity dates for developer and trust loans. For loans due in the next six months, lenders have been asked to extend the repayment period by one year, while bond issuers and bondholders have been encouraged to reach agreements on repayment and loan extensions before the bonds mature. At the same time, banks are being encouraged to assume control of any high-quality developers’ problem projects via acquisition loans. National and local asset-management companies have also been asked to collaborate with developers and banks to accelerate asset disposals.

A more constructive outlook of China’s property sector

In our opinion, the recently announced zero-COVID fine-tuning (“20 measures”) and financing programs for property-sector developers (“16 measures” and “the second arrow”) support our 2023 base case. We expect further economic reopening after March, property sales and investment could bottom and stronger domestic demand to support GDP growth throughout 2023.

The “20 measures” fine-tuning of China’s zero-COVID policy is positive as it signals an eventual economic reopening. While we have observed early signs that some of these measures have been implemented in a limited number of cities, the timing and extent of reopening will depend on COVID case numbers through the winter months. In the near term, a rebound in the macro economy will likely be limited as overall COVID-control policies remain strict. Meanwhile, we already see a rise in winter cases, with daily numbers breaching 20,000 for the first time since May, although most are without symptoms.

We view the announced “16 measures”, “the second arrow” policies and the RMB200 billion relending loan plan as positive, easing the onshore debt refinancing risk of Chinese developers, particularly among the privately owned enterprises (POEs). However, we note that policymakers are focusing on safeguarding onshore stakeholders, including onshore bondholders, homebuyers, and the banking system. Offshore bondholders will indirectly benefit from POEs having lower onshore refinancing risk, including bond and bank lending. Nevertheless, these measures can help the sector find a bottom over the next 12 to 18 months. To see a sustained recovery in China’s real-estate sector, we will closely monitor the effective implementation of the announced measures and any recovery in physical market sales.

Overall, we view the latest policy announcements positively, as they should pave the way for economic reopening and an eventual recovery in the property sector from the second quarter of next year. That said, near-term market volatility should remain high as economic activity is expected to stay sub-par for another few quarters.

Stay disciplined amid increasing policy support

Leading up to these policy pivots, the China bond team closely monitored developments that could lead to a more constructive tone in China credit. This included the prospects for “The Reopening Trade” and “All in Policy Bazooka” to support China’s economic recovery (refer to our previous Investment Note – China bonds: a potentially resilient risk diversifier, 18 October 2022).

While we may not be there yet in terms of an “all in” effort by the government to boost economic growth, we view the latest developments as a significant and favourable shift in policy towards China credit. To date, investors might have taken advantage of the market rally to trade and rebalance property exposure across their portfolios tactically. Looking ahead to the year's end, we believe remaining disciplined and maintaining credit beta at around current levels would be rewarding. However, as we gain more visibility and conviction around China’s economic recovery, investors can seek opportunities to add risk.

We continue to take a disciplined approach to our property exposure. We see increasing policy support as constructive for China property and the broader China credit universe, given the improved prospects for economic recovery as we enter 2023. Following the steep declines experienced by property-sector bonds in 2022, valuations are now attractive for those developers explicitly backstopped by government funding support. As sentiment towards the sector continues to improve, we would expect asymmetric upside potential for the performance of our China bond strategies over the next few quarters.

Conclusion

In our view, the latest developments indicate a significant shift in policy direction, which could potentially be favourable towards China’s credit market. Despite this, we remain disciplined towards year-end, until China’s economic recovery shows more visibility. For actively managed China bond strategies, we expect to see more upside than downside potential over the next few quarters.

 

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1 Bloomberg, 11 November 2022.

2 China Daily, 15 November 2022.

3 Global Times, 9 November 2022.

4 CBIRC, 23 November 2022.

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  • Some funds may invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
  • Some funds may invest in securities of small and/or medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
  • Some funds may invest in a single country/region and/or a particular industry sector which may be concentrated and subject to greater risks than diversified investments in several countries and/or regions and across sectors.
  • Some funds may invest directly in certain China A shares via the Stock Connect, which may involve risks related to investments via the Stock Connect and Mainland China investment.
  • Some funds may have significant exposure to Renminbi ("RMB") bonds/equity/assets or emerging markets, which will be subject to debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with more established markets.
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  • As RMB is not freely convertible, currency conversion is subject to exchange controls and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds with substantial RMB exposure may be more volatile than that of a fund having a more diverse portfolio of investments.
  • Some funds’ performance will be closely tied to the economic, political, regulatory, geopolitical, market, currency or other conditions in the European Economic Area and may be subject to increased liquidity, price, and foreign exchange risk.
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  • Manulife Global Fund is an umbrella fund comprising a number of sub-funds investing in equity and/or fixed income securities, each of which has a different investment objective and risk profile and may involve equity market,  geographical concentration, sovereign debt, liquidity, volatility, credit downgrade, interest rate, counterparty risks. 
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  • Certain sub-funds invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
  • Certain sub-funds invest in securities of small and medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
  • Certain sub-funds concentrate their investments in a single country and/or a particular industry sector are subject to greater risks than diversified investments in several countries and/or regions and across sectors.
  • Certain sub-funds may invest directly in certain China A shares via Stock Connect, which may involve in risk related to Investments via Stock Connect and Mainland China investment.
  • Investment involves risk. The sub-funds may expose their investors to capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds and their share classes.
  • Each sub-fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes.  The use of FDIs exposes the Fund to additional risks, including counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. 
  • Given RMB is currently not a freely convertible currency,  payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation.  Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of certain sub-funds.


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  • Manulife Advanced Fund SPC is an umbrella fund comprising a number of sub-funds investing primarily in equity and bond securities, each of which has a different investment objective and risk level.
  • The sub-funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. A sub-fund may at its discretion pay dividend out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share of the respective share classes after the distribution date.
  • Certain sub-funds with significant exposure to Renminbi (“RMB”) bonds/equity/assets or emerging markets, may involve debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with the world's more established markets.
  • A bond sub-fund may hold a significant portion of assets in deposits if there are not sufficient RMB instruments for it to invest in.  This may adversely affect its return and performance.
  • Certain sub-funds using invest directly in debt instruments/shares via QFII regime, the Bond Connect and/or the Foreign Access Regime are subject to various requirements and restrictions under the laws of Mainland China related to investment in QFII and/or China Interbank Market and custodial risks.
  • RMB is not freely convertible and is subject to exchange controls and restrictions.
  • Certain sub-funds may have significant concentrated exposures to particular industry sectors and geography's, which subjects investors to concentration and equity market risk.
  • Certain sub-funds may invest in equities of small- and mid-capitalization companies, which can expose investors to liquidity and volatility risks, and is subject to greater risk than is customarily associated with investments in larger capitalization companies.
  • Investment involves risk. The sub-funds may expose to a high risk of capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds.


Manulife Hong Kong Series

  • Manulife Hong Kong Series (“the Series”) is an open-ended unit trust comprising a number of funds primarily investing in equities, debt securities, exchange-traded funds and/or collective investment schemes, each of which has a different investment objective and risk level.
  • The funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of capital and/or out of gross income of certain funds in respect of Inc classes, while charging/paying all or part of certain funds’ fees and expenses to/out of capital of certain funds. This represents a return or a withdrawal of part of an investor's original investment amount or capital gain attributable to that amount. Distributions will result in an immediate decrease in the net asset value of the relevant units. Class AA (RMB) Inc Hedged Unit of certain funds is subject to higher distribution risks than other non-hedged unit classes.
  • Certain funds may involve equity market, emerging markets, Dim Sum bond market, concentration, volatility, liquidity, credit, credit ratings, below investment grade and unrated securities, credit rating downgrading, interest rates, valuation, sovereign debt, unlisted debt securities, political and regulatory, currency, foreign exchange, derivative and structured product, hedging, and distribution risks.
  • Certain funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
  • Certain fund is subject to the risks of investing in other funds and the risks relating to investment in exchange traded funds, Strategic and Tactical Asset Rebalancing Strategy (“STARS”), small- and mid-capped companies, convertible bonds and the risks associated with securitised debt instruments and investments in loss-absorption features. Certain fund is a feeder fund that invests all or substantially all of its assets in another collective investment scheme (the “master fund”) and is therefore subject to the risks of investing in the master fund.
  • As RMB is not freely convertible, currency conversion is subject to exchange controls, and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds may be more volatile than that of a fund having a more diverse portfolio of investments.
  • Certain fund will not have direct investments other than cash, cash equivalents and financial derivative instruments (such as futures, options and forwards).
  • Investment involves risk. The funds may expose its investors to capital loss. Investors should not make investment decisions based on this material alone but should read the offering document for details, including the risk factors, charges and features of the Fund and its unit classes.

 General Risk Disclosure
 

  • Funds offered on this platform may invest in equity, fixed income securities, exchange-traded funds, collective investment schemes and/or other instruments, including derivatives, and each of which has its specific investment objective/ policy with its specific features and different risk profile.
  • Distribution of dividends, the frequency of distribution and the amount/rate of dividends are not guaranteed. Dividend of certain share/unit classes, at the fund or the investment manager’s discretion, may be paid out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share/unit of the respective share/unit classes after the distribution date.
  • Some funds may invest in bonds or debt securities which may be subject to credit, liquidity, counterparty and market risks.
  • Some funds may invest in non-investment grade bonds and unrated securities which may be subject to greater credit and liquidity risks, and may be more volatile than higher rated securities. Some funds may invest in investment grade debt securities, which may be subject to ratings downgrades by the rating agencies that may affect the net asset value of the fund.
  • Some funds may invest in derivative instruments which may involve additional risks. (For example, leverage may cause greater volatility.)
  • Some funds may make extensive use of derivatives including more complex derivative instruments or strategies to achieve the investment objective, this may give rise to additional exposure in that performance may rise or fall more than it would have done otherwise. In adverse situations, the fund’s use of derivative instruments may become ineffective and the fund may suffer significant losses. The use of derivatives may give rise to leverage, liquidity, counterparty and valuation risks.
  • Some funds may invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
  • Some funds may invest in securities of small and/or medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
  • Some funds may invest in a single country/region and/or a particular industry sector which may be concentrated and subject to greater risks than diversified investments in several countries and/or regions and across sectors.
  • Some funds may invest directly in certain China A shares via the Stock Connect, which may involve risks related to investments via the Stock Connect and Mainland China investment.
  • Some funds may have significant exposure to Renminbi ("RMB") bonds/equity/assets or emerging markets, which will be subject to debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with more established markets.
  • Some funds with significant exposure to RMB bonds/equity/assets may hold a significant portion of assets in deposits if there are not sufficient RMB instruments to invest in. This may adversely affect the funds’ return and performance.
  • Some funds using Qualified Foreign Institutional Investor (“QFII”) quota to invest directly in debt instruments/shares in Mainland China may be subject to various requirements and restrictions under the laws of Mainland China related to QFII investment and custodial risks.
  • Some funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
  • As RMB is not freely convertible, currency conversion is subject to exchange controls and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds with substantial RMB exposure may be more volatile than that of a fund having a more diverse portfolio of investments.
  • Some funds’ performance will be closely tied to the economic, political, regulatory, geopolitical, market, currency or other conditions in the European Economic Area and may be subject to increased liquidity, price, and foreign exchange risk.
  • Some funds may invest in Russia and some investments in Russian securities may be unlisted securities not dealt on a regulated market. The Russian market presents specific risks in relation to the settlement and safekeeping of securities.
  • Investment involves risk. Investors may expose to capital loss and should not invest solely based on the information on this website alone and should read the offering documents for details including the associated risk factors, charges and features of the funds and their share/unit classes. Past performance information is not indicative of future performance.


Manulife Global Fund

  • Manulife Global Fund is an umbrella fund comprising a number of sub-funds investing in equity and/or fixed income securities, each of which has a different investment objective and risk profile and may involve equity market,  geographical concentration, sovereign debt, liquidity, volatility, credit downgrade, interest rate, counterparty risks. 
  • The relevant distributing class of the sub-funds does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of certain sub-funds in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es).  Dividends paid out of capital of these sub-funds amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the sub-funds.
  • Certain sub-funds invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
  • Certain sub-funds invest in securities of small and medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
  • Certain sub-funds concentrate their investments in a single country and/or a particular industry sector are subject to greater risks than diversified investments in several countries and/or regions and across sectors.
  • Certain sub-funds may invest directly in certain China A shares via Stock Connect, which may involve in risk related to Investments via Stock Connect and Mainland China investment.
  • Investment involves risk. The sub-funds may expose their investors to capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds and their share classes.
  • Each sub-fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes.  The use of FDIs exposes the Fund to additional risks, including counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. 
  • Given RMB is currently not a freely convertible currency,  payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation.  Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of certain sub-funds.


Manulife Advanced Fund SPC

  • Manulife Advanced Fund SPC is an umbrella fund comprising a number of sub-funds investing primarily in equity and bond securities, each of which has a different investment objective and risk level.
  • The sub-funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. A sub-fund may at its discretion pay dividend out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share of the respective share classes after the distribution date.
  • Certain sub-funds with significant exposure to Renminbi (“RMB”) bonds/equity/assets or emerging markets, may involve debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with the world's more established markets.
  • A bond sub-fund may hold a significant portion of assets in deposits if there are not sufficient RMB instruments for it to invest in.  This may adversely affect its return and performance.
  • Certain sub-funds using invest directly in debt instruments/shares via QFII regime, the Bond Connect and/or the Foreign Access Regime are subject to various requirements and restrictions under the laws of Mainland China related to investment in QFII and/or China Interbank Market and custodial risks.
  • RMB is not freely convertible and is subject to exchange controls and restrictions.
  • Certain sub-funds may have significant concentrated exposures to particular industry sectors and geography's, which subjects investors to concentration and equity market risk.
  • Certain sub-funds may invest in equities of small- and mid-capitalization companies, which can expose investors to liquidity and volatility risks, and is subject to greater risk than is customarily associated with investments in larger capitalization companies.
  • Investment involves risk. The sub-funds may expose to a high risk of capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds.


Manulife Hong Kong Series

  • Manulife Hong Kong Series (“the Series”) is an open-ended unit trust comprising a number of funds primarily investing in equities, debt securities, exchange-traded funds and/or collective investment schemes, each of which has a different investment objective and risk level.
  • The funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of capital and/or out of gross income of certain funds in respect of Inc classes, while charging/paying all or part of certain funds’ fees and expenses to/out of capital of certain funds. This represents a return or a withdrawal of part of an investor's original investment amount or capital gain attributable to that amount. Distributions will result in an immediate decrease in the net asset value of the relevant units. Class AA (RMB) Inc Hedged Unit of certain funds is subject to higher distribution risks than other non-hedged unit classes.
  • Certain funds may involve equity market, emerging markets, Dim Sum bond market, concentration, volatility, liquidity, credit, credit ratings, below investment grade and unrated securities, credit rating downgrading, interest rates, valuation, sovereign debt, unlisted debt securities, political and regulatory, currency, foreign exchange, derivative and structured product, hedging, and distribution risks.
  • Certain funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
  • Certain fund is subject to the risks of investing in other funds and the risks relating to investment in exchange traded funds, Strategic and Tactical Asset Rebalancing Strategy (“STARS”), small- and mid-capped companies, convertible bonds and the risks associated with securitised debt instruments and investments in loss-absorption features. Certain fund is a feeder fund that invests all or substantially all of its assets in another collective investment scheme (the “master fund”) and is therefore subject to the risks of investing in the master fund.
  • As RMB is not freely convertible, currency conversion is subject to exchange controls, and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds may be more volatile than that of a fund having a more diverse portfolio of investments.
  • Certain fund will not have direct investments other than cash, cash equivalents and financial derivative instruments (such as futures, options and forwards).
  • Investment involves risk. The funds may expose its investors to capital loss. Investors should not make investment decisions based on this material alone but should read the offering document for details, including the risk factors, charges and features of the Fund and its unit classes.
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