The People's Bank of China and the Hong Kong Monetary Authority signed a supplementary memorandum of cooperation to permit Hong Kong banks to offer basic RMB accounts and more yuan denominated financial products to be developed in Hong Kong. As demand for the RMB has risen on closer trade and economic ties with China, the announcement further internationalises the RMB while strengthening Hong Kong as the premier offshore RMB market. This agreement will also set new measures permitting central banks of China and Taiwan to authorize BOC Hong Kong to offer yuan cash settlement services to Taiwanese banks operating in Hong Kong.

China's National Energy Administration announced a new energy development plan involving as much as RMB 5 trillion in additional investments over the next ten years, as the scheme will foster the development of nuclear, wind and solar power, smart grid and unconventional natural gas. The implementation is expected to reduce 1.2 billion tonnes of carbon dioxide emission and 7.8 million tonnes of sulfur dioxide in 2020. The agency also announced that the proposal could create approximately 15 million jobs with a combined output from new energy industries to increase by RMB 1.5 trillion each year.

In an aggressive strategy to further industrialise rural and western provinces in China, Beijing plans to invest a total of RMB 682 billion in western projects this year, while also investing RMB 200bn over the next two years to expand and upgrade rural power grid networks. China continues to nurture western provinces into the new growth engines for the economy and reorient its growth from inward catalysts.

Robust semi-annual results from A-share listed companies injected strong investor confidence into the market. Interim results will further support the market as domestic equities are expected to outperform the H-share due to cheaper valuations among blue chips and better earnings and growth potential. While normalised growth for China is expected during the second half of the year, significant liquidity tightening remains an unlikely scenario.

In the near term, the portfolio aims to further accumulate companies benefitting from China's aggressive efforts to push for energy efficiency and advanced technology, and away from mass industrials such as steel, coal and low-valued-added manufacturers. China will continue to improve profitability and competitiveness of various industries and sectors by allowing more M&A activities and industry consolidation. Looking forward, the Fund aims to maintain its current weighting in cement producers as China continues to expand its social housing projects. We also remain positive towards property related companies due to strengthening real demand.




* Monthly commentary based on USD Class

^ Since inception of USD Class (10th March, 2008), GBP Class (11th March, 2008)




Important Information:

Investment involves risk. Past performance is not indicative to future performance. The fund may invest in emerging markets and derivative instruments and thus involve higher risk and volatility. Before investing, please refer to the offering document(s) for details, including the risk factors.

The document is issued by Hamon Investment Group and has not been reviewed by the SFC. It is not a recommendation, an offer or invitation to investment. Consult your financial advisor before making any investment decisions.