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BNP PARIBAS ASSET MANAGEMENT - Emerging Street Asia 1440x300

Parvest Equity China

 

A concentrated portfolio of 40-60 stocks that should benefit from Chinese economic growth.

Important Notes:

1) The fund seeks to increase the value of its assets over the medium term by investing mainly in equities and/or equity equivalent securities of companies that have their registered offices or conduct the majority of their business activities in China, Hong Kong or Taiwan.

2) The fund may use financial derivative instruments extensively for investment and/or hedging purposes, which may involve material additional risks, for example counterparty default risk or insolvency, volatility risk, liquidity risk, leverage risk and valuation risk, and may expose the fund to significant losses.

3) The fund has significant exposure to emerging markets and a single country (China) and is likely to be subject to a greater concentration risk and higher volatility than a more diversified investment. Emerging markets may have higher legal, regulatory and political risk.

4) The management company may at its discretion pay dividends out of the capital of the fund. Payment of dividends out of capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. Any distributions involving payment of dividends out of the fund’s capital may result in an immediate reduction of the net asset value per share.

5) Investors should not solely rely on this document to make any investment decision. Please refer to the Hong Kong offering document for further information (including the risk factors) about the fund.

6) On 21 May 2013, BNPPL1 Equity China was merged into PARVEST Equity China. The performance / information shown on / before the date of merger belong to the old fund. The inception date is that of the old fund.

7) Effective 1 July 2011, the benchmark has been changed from FTSE MPF China Gross Return Index to MSCI China 10/40 Net Return Index. Any benchmark performances quoted before 1 July 2011 belong to the old benchmark.

 

Opportunity

China is fundamentally shifting its economic model from export-driven capital investment towards consumption, efficiency and productivity, led by an expanding middle-class and vast urbanisation. China has also evolved from an innovation ‘sponge’, absorbing global technologies and knowledge, to an innovation leader. With China’s significant progress in opening up its capital market, investing in Chinese companies may offer benefits from these structural trends.

We believe the following investment opportunities will continue over the next few years as the sectors benefitting from the following three structural trends are positioned for sustainable growth:

  1. Technology and innovation
    The internet sector is highly synergistic and leverages infrastructure, user bases, unified language and culture, policy and talent. At over 700 million units, China has the largest population of mobile internet users in the world*.
  2. Consumption upgrading
    Chinese consumers are transitioning from “having” to “having more” and “having better”. As a result, companies with strong brand premiums, differentiated products and long-term competitive advantages tend to outperform the market.
  3. Industry consolidation
    We observe a transition where companies’ market positions are reinforcing and market leaders are gathering the cash flow and capabilities to further consolidate the market.

Fund highlights

  • Parvest Equity China: a Chinese equities fund with an ‘all China’ coverage (including A-shares, H-shares, US ADRs, Taiwanese stocks). It uses fundamental bottom up stock selection to build a concentrated portfolio of 40-60 high-conviction stocks.
  • Growth at Reasonable Price (GARP) investment approach with a ‘Growth Framework’: a unique feature of the fund’s investment process is the assignment of a differentiated ‘Growth Framework’ to identify companies with distinct sources of growth and to adapt to China’s fast shifting dynamics.
  • Managed by BNPP AM’s Hong Kong- and Shanghai-based investment team: this local team provides a strong edge in the interpretation of political, economic, and social nuances in China. The team members have a long track record of investing in Chinese stocks and conduct more than 500 company visits per year. It also leverages on our joint venture with Chinese fund management company HFT Investment Management for A-shares coverage.

* Source: China Internet Network Information Center (CNNIC), as of 8 January 2018.