The Fund fell 0.8%, while the benchmark index rose 2.51%. The Fund's US-listed companies continued to be affected by negative investor sentiment, and dragged down the performance. The Fund's relatively underweight position in Taiwanese holdings also led to the underperformance. However, interest rate sensitive stocks were outperformers, including financials, insurance names and brokerages. Cement and material shares rallied on speculation that money supply would expand, while an outdoor advertising holding rebounded.

China's decision to cut the PBOC required reserve ratio by 50 basis points effective from December 5 came earlier than expected, as we believe that further policy easing is imminent. With the government shifting its priority to support economic growth, property stocks rebounded even as physical prices continue to moderate.

The conclusion of the China Economy Work Conference was a market disappointment, as the market expected the announcement of new fiscal stimulus. Given the transition of leadership in 2012, policy leaders decreed that they would continue to maintain the current "proactive fiscal policy and prudent monetary policy."

Consumer staples and discretionary names weighed on the Fund's performance, as these sectors are lagging industrial names due to slower economic growth. After outperforming in previous months, food and beverage names and selective tech stocks in the portfolio encountered heavy pressure on relatively demand valuations and moderate growth in 4Q.

European worries and a slowdown in smart-phone demand, weighed on investor sentiment in Taiwan, but the TWSE closed 2.6% higher on government buying support. The market awaits for the Presidential election in January, where the race between the opposing DPP and the incumbent KMT remains tight, with little evidence of a clear winner emerging during the final month of 2011. A KMT victory would be positive for markets, as President Ma is more focused towards fully utilizing cross-strait relations as means to promote economic growth.

We continue to believe that China's easing of monetary policy will proceed but only gradually since the nation's leadership handover is not scheduled to be completed until 2Q12. While the economy is expected to moderate throughout the 1H12 on an year-on-year basis, we expect a bottoming of the quarter on quarter basis by end of 1Q12.

The Fund expects banks, insurance names and brokers to re-rate on easier credit conditions in 2012. Rising wages should also support Internet, consumer discretionary and telecommunication holdings.




* 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.