The content on this page is marketing communication. Investment in funds always involves some kind of risk. Past performance is no guarantee for future performance. Fund units may go up or down in value and investors may not get back the amount invested.
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East Capital China A-Shares is now East Capital China (all shares). The fund has been renamed and the investment spectrum for the fund has been broadened to also include US and Hong Kong listed Chinese shares. (19 July 2024)
Unique, opportunistic fund targeting high-quality but unloved Chinese companies
Chinese stocks (particularly those listed offshore) are currently trading at very attractive valuations and paying generous dividend yields despite solid earnings growth, driven by several years of poor investor sentiment and relentless selling by international investors. The East Capital China Fund aims to take advantage of this by investing in exciting but unloved companies across the Chinese investment universe, both onshore and offshore. The fund offers a uniquely strong combination of growth and value, with a P/E ratio of 7.3x for 2024 and 18% earnings growth implying a PEG ratio (price/earnings to growth) of 0.4x. The corresponding PEG ratio for the S&P500 is 2.2x.
We have a dynamic and high-conviction approach to portfolio construction, meaning that we remove holdings as soon as our conviction falls. This means we have higher turnover than many of peers, but also that we avoid the biases that plague most investors (such as inertia bias).
Our team of highly experienced emerging markets specialists is on-the-ground, based in Hong Kong. We have a long track record, with the core team having a combined 39 years of regional and industry experience. We were the first Nordic manager to invest in China A-shares back in 2014, and the first manager globally to invest through Stock Connect.
Fund Highlights
The Chinese equity market delivered a mixed performance in the fourth quarter of 2024, shaped by policy-driven optimism and structural divergence. The quarter began on a positive note, with the MSCI China All Shares Index surging 23% during the last five trading days of September, buoyed by unexpected government economic policy changes. However, after the October National Day holidays, the market began to consolidate amid cautious sentiment and a lack of detailed measures to boost the economy further.
As a result, the index declined by 6.3% in Q4 2024. Reflecting its growth-orientated approach, our China fund experienced a sharper correction, returning -11.5% during the same period. This erased much of the alpha generated since the fund's re-initiation on 1 August. Despite the volatility, our China fund delivered an annual return of 12.4% in 2024, outperforming the index, which posted an 11.4% return, achieving a 1% alpha for the year.
On 24 and 26 September, the Chinese government announced an unexpected, broad, and coordinated set of support measures to stimulate the flagging economy. A series of gradual but accelerated policy implementations followed, encompassing fiscal and monetary initiatives alongside structural strategies. These included expanding domestic demand, stabilising the property market, and supporting foreign trade, which together spurred a rapid recovery in market sentiment. Investment in equipment and infrastructure increased significantly during the fourth quarter, while consumption of home appliances and automobiles also improved.
At the December Politburo meeting, the government proposed adopting a "moderately loose" monetary policy - the first such declaration since 2011. At the Central Economic Work Conference, officials further emphasised plans to increase the fiscal deficit ratio in 2025, signalling a commitment to bolstering economic growth.
Turning to our portfolio, Qifu, a loan facilitation platform, was the largest positive contributor to the fund's performance for the second consecutive quarter. Following our active engagement, the company revised its total return policy upward, resulting in a total shareholder yield (dividend + buyback) of 15% in 2025. Meanwhile, the top performer was smartphone maker Xiaomi, which surged 53% in Q4 2024 after the successful debut of its electric vehicle (EV) business. We maintain a favourable outlook for Xiaomi in 2025, as it stands to benefit significantly from the Chinese government's trade-in program for both consumer electronics and EVs.
Despite this strong performance, the market faces potential headwinds in 2025. Two key risks warrant close monitoring:
Nonetheless, we remain cautiously optimistic. The combination of attractive valuations and a supportive policy environment provides a solid foundation for sustained market strength. As 2025 begins, we believe China is well positioned to reclaim its role as a key driver of global economic growth.
Performance in USD net of fees.
The information should not be used as the sole basis for an investment. Please read the Prospectus and the KID, which are available on the fund page. This publication is not directed at you if we are prohibited by any law in any jurisdiction from making this information available to you and is not intended for any use that would be contrary to local laws or regulations. Every effort has been made to ensure the accuracy of the information, but it may be based on unaudited or unverified figures or sources.
Fund
East Capital China A USD
ISIN
LU1840853219
Launch date
2018-09-04
Domicile
Luxembourg
Morningstar Rating™ (Total rating)
4
Yearly fee
2.23%
Management fee
1.70%
Benchmark
MSCI China All Shares Index (Total Return Net)
Fund
East Capital China A EUR
ISIN
LU1840852328
Launch date
2018-09-05
Domicile
Luxembourg
Morningstar Rating™ (Total rating)
3
Yearly fee
2.23%
Management fee
1.70%
Benchmark
MSCI China All Shares Index (Total Return Net)
Fund
East Capital China A SEK
ISIN
LU1840854290
Launch date
2018-09-05
Domicile
Luxembourg
Morningstar Rating™ (Total rating)
3
Yearly fee
2.23%
Management fee
1.70%
Benchmark
MSCI China All Shares Index (Total Return Net)
Fund
East Capital China R EUR
ISIN
LU1840852914
Launch date
2018-09-05
Domicile
Luxembourg
Morningstar Rating™ (Total rating)
3
Yearly fee
1.73%
Management fee
1.20%
Benchmark
MSCI China All Shares Index (Total Return Net)
Fund
East Capital China R USD
ISIN
LU1840853722
Launch date
2018-09-05
Domicile
Luxembourg
Morningstar Rating™ (Total rating)
3
Yearly fee
1.72%
Management fee
1.20%
Benchmark
MSCI China All Shares Index (Total Return Net)
Fund
ISIN
Launch date
0001-01-01
Domicile
Morningstar Rating™ (Total rating)
n/a
Yearly fee
Management fee
0.00%
Benchmark
MSCI China All Shares Index (Total Return Net)
Funds with risk class 6-7 can have sharp decreases or increases in value.
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A full spectrum of expertise
Peter Elam Håkansson
Chairman & Group Chief Investment Officer
Global Markets
Karine Hirn
Partner & Group Chief Sustainability Officer
ESG & Sustainability / Emerging & Frontier Markets
Jacob Grapengiesser
Partner & Chief Investment Officer East Capital
Emerging & Frontier Markets
Eglé Fredriksson
Portfolio Manager
Emerging Europe
David Nicholls, CFA
Portfolio Manager
Emerging Markets & ESG
Emre Akcakmak
Head of Frontier Markets
Frontier Markets
Michał Czerwiński
Senior Analyst
Emerging Europe
Lucy Lu
Research Associate
Greater China
Alexander Gyllenberg
Senior Analyst
Frontier Markets
Hao Zhang
Assistant Portfolio Advisor
Greater China & Korea
George Svensson
Analyst ESG, East Capital Group
ESG
Ritish Rangwalla
Senior Analyst (Independent)
India
Reporting of the fund's historical returns does not consider inflation.
Performance prior to 03.09.2018 is represented by the East Capital China A-Shares Fund (LU1001588091) a Sub-fund of East Capital (Lux) SCA-SICAV SIF, whose assets were contributed to the share class on that date, and which had substantially the same investment strategy.
Investing through a financial intermediary may impact the investor’s rights to compensation in the event that compensation is paid due to errors or non-compliance.
2022-04-01
The merger of the Funds East Capital Balkan, East Capital New Europe, East Capital Russia and East Capital Eastern Europe with East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe (respectively) has been carried out in accordance with the submitted merger plan, which was approved by Finansinspektionen (the Swedish Financial Supervisory Authority) on 15 February 2022.
East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe thus ended on 1 April 2022.
Following the merger, former shareholders in East Capital Balkan, East Capital New Europe, East Capital Russia and East Capital Eastern Europe now own shares in East Capital Balkans, East Capital New Europe, East Capital Russia and East Capital Eastern Europe.
More information about the merger, such as the auditor's opinion on the exchange relationship, can be obtained from the management company East Capital Asset Management S.A. upon request.
The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by East Capital. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.mscibarra.com)