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“The 19th century belonged to England, the 20th century belonged to the US, and
the 21st century belongs to China. Invest accordingly.” -Warren Buffett
Source: The Australian (April 2009)
Disclaimer: This summary is for information purposes only and does not constitute an offer to sell or a solicitation to buy. Citizens or residents of
the United States may not invest in this Fund. Opinions and estimates constitute the manager’s judgment and are subject to change without notice.
Past performance is not indicative of future results. Investments in emerging markets should be considered high risk where a portion or total loss of
capital is conceivable. No assurance can be given that the investment objective will be achieved or that an investor will receive a return of all or part
of his/her initial capital, and investment results can fluctuate substantially over any given time period. Please refer to the Fund’s prospectus which
contains brief descriptions of certain risks associated with investing in the fund. Questions should be directed to your local representative or financial
advisor. This document may not be reproduced, distributed, or published for any purpose without the prior written consent of the manager.
Ver 6-2010 1
China A-shares Market
1200
1000
800
600
400
200
0
Jan-00
Jun-00
Apr-01
Sep-01
Oct-03
Aug-04
Jan-05
Jun-05
Nov-00
Dec-02
Apr-06
Sep-06
Oct-08
Aug-09
Jan-10
Jun-10
Nov-05
Dec-07
May-03
May-08
Feb-02
Feb-07
Jul-02
Jul-07
Mar-04
Mar-09
H-Share S&P 500 A-Share MSCI Pacific ex Japan
YTD Performance % 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD
A-shares -20% -3% 0% -20% -3% 113% 89% -58% 65% -27%
H-shares 11% 4% 132% 3% 13% 65% 68% -37% 79% -10%
S&P 500 -16% -22% 30% 7% 6% 11% 2% -34% 35% -8%
MSCI Pacific ex Japan -15% -10% 40% 22% 11% 20% 26% -47% 83% -13%
Source: Bloomberg, June 2010
2
From H-shares to A-shares
Source: Bloomberg
We believe in the next 2-5 year, we will witness a massive shift from Hong Kong
listed H-shares into A-shares listed in domestic China (Shanghai and Shenzhen).
Foreign investors, like FMG has so far almost exclusively invested in China via H-
shares as A-shares has been restricted to foreigners.
We estimate that today there are four times as many liquid A-shares traded in
mainland China as H-shares traded in Hong Kong.
3
Why China A-shares?
Direct Exposure to Chinese Markets, wider stock selection – about more than 2000
listed companies
Abundant liquidity
This is why FMG China Fund is shifting its focus from H-shares to A-shares.
4
Chinese Share Classes
H Shares(about 150) – Companies incorporated in the PRC and nominated by the Chinese
Government for listing in Hong Kong. -We will from time to time hold some stocks if the
premium is favorable and if stocks are not listed in A-shares.
Red-Chips(about 100) – Securities of Hong Kong incorporated companies with assets in China,
traded in Hong Kong - We will from time to time hold some stocks if the premium is favorable
and if stocks are not listed in A-shares.
P-Chips(about 150) – Privately owned companies listed predominately in Hong Kong, Singapore
or NASDAQ -We will from time to time hold some stocks if the premium is favorable and if
stocks are not listed in A-shares. 5
China A-shares Market
6
China A-shares Market
7
Reasonable Valuation
2011E
PEX14
8
China is far from over-invested
9
China will continue to deliver growth
China’s growth is estimated to be 2-4 times higher China’s Shares in World Foreign Reserve
than most major developed economies.
GDP (%)
10
High Savings and Little Debt
11
Growing Middle Class – more will spend
About 600 million middle class households by year 2014, growing at nearly 11% p.a.
Source: CLSA Asia Pacific Markets, Euromonitor, World Bank, April 2010
12
Abundant Liquidity
Source: CEIC, China Statistical Year Book, WIND, NBS Household income survey, 25/3/09
13
China accounts for 2% of global index weight but 9-12% of
global GDP
Source: Bloomberg, FactSet, I/B/E/S, IMF, MSCI, GS Global ECS Research estimates
14
FMG - Marketing Contacts
Fund Administrator
Apex Fund Services (Malta) Ltd., Floor 6, Airways House, Gaiety Lane, Sliema, SLM 1549, Malta
Tel: 356 2131 1330 - Fax: 356 2131 2880 - e-mail: anthony@apexfunds.com.mt
www.fmgfunds.com 15