Q&A with the Portfolio Manager: Greater China Equities

15 June 2023

Kai Kong Chay, Senior Portfolio Manager, Greater China Equities

Greater China stock markets experienced an impressive rebound on cyclical drivers such as China’s reopening and economic re-acceleration. In this Q&A, Kai Kong Chay, Senior Portfolio Manager, Greater China Equities, highlights the secular growth themes and puts some top-of-mind queries into perspective.

1. Since 2023 Greater China Equities have benefitted from the reopening pivot, stabilisation in China’s property sector and pro-growth government policies. Can you share the latest sector outlook and illustrate how differentiated you are in capturing this rally?

As we highlighted earlier this year, the service sector's recovery should be the most significant development to emerge from China’s reopening. As it evolves, consumption-related plays are fuelled by recovery and reopening dynamics across sectors¹. Before the government’s official announcement in Q4 2022, as active managers, we were already positioned in a variety of sub-sectors that went on to benefit from China’s re-opening, including i) online platform companies, ii) hospitality (online travel agencies and hotels), iii) healthcare names (medical devices and equipment). These investments delivered positive returns in the Q1 2023 rally. We also selectively took profits in some consumer names, e.g., luxury retailers, Macau gaming, and duty-free companies.

We continue to believe that various consumption-related sectors, e.g., e-commerce, hospitality, and domestic sportswear brands, may ride on a potentially sustainable recovery into the second half of this year on the back of higher demand, better pricing, and volume growth.

We had also expected that a strong rebound in consumption would trigger investment appetite. In fact, the reopening accelerates the pace of digitalisation of traditional industries, and our positions in innovation-related themes, such as application software, semiconductors, and online gaming, are well supported in this rally.

2. Due to geopolitical tensions, COVID-19 disruption and rising labour costs, the past few years have seen multinational firms shift part of their global supply chains out of China and pursue an additional supply chain in other places like Southeast Asia and Mexico (“China+1”). What’s your view of this diversified supply chain model? Which advantageous and strategic industries does China retain in the global supply chain?

Global manufacturing GDP of around US$14.2 trillion in 2021 was underpinned by thousands of companies in traditional industries². Nowadays, goods are not merely from traditional industries; they could include electric vehicles (EVs), semiconductor products and innovative software/hardware products that call for a new and diversified supply chain.

China's manufacturing – too big to decouple

China’s approximately US$4.9 trillion manufacturing economy ranked the largest (over 30%) globally in 2021, vs US and Europe (about 16% each). Despite China’s sheer size and dominance, its manufacturing GDP (in local-currency terms) still showed growth momentum, which rose by 9.8% YoY and 7.0% YoY in 2020-21/2021-22, respectively³.

Besides, when we look at China, it is now emerging as the single largest market for industrial original equipment manufacturers (OEMs)⁴, as these companies grow their presence in China not only because of its manufacturing capabilities but also due to market proximity and onshore customer needs. We believe the linkages between China’s manufacturing supply chain and the rest of the world are still strong.

From “Made in China” to “Made by China”

We acknowledge the scenario whereby more supply chains were moving out or finding a replacement for China in the past few years due to geopolitical tensions, COVID-19 disruption, and rising labour costs. Indeed, multi-national companies (MNCs) have been rethinking the two-decade production models (“Made in China”) and advocate the “China+1” model to avoid overconcentration in China’s production lines, to diversify business lines and reduce risk.

Besides MNCs, we see Chinese exporters becoming more internationalised by forging the same path as Japanese and South Korean companies: they are building plants and shifting production bases offshore⁵ to hedge against rising local labour/environmental costs and growing geopolitical risks so clients can place orders in a third country. For example, it’s reported that furniture companies are moving to Mexico, as are large home appliance and car manufacturers, in order to serve customers in the United States and take advantage of a 2020 North American trade deal⁶. Ultimately, these Chinese exporters’ goods (“Made by China”) will be labelled as “Made in Mexico”.

Another example is consumer electronics. An international smartphone operator expanded its production lines to India via its Chinese contract manufacturers under India’s Production Linked Incentive (PLI) Scheme. These smartphones are made by Chinese manufacturers in India and will be labelled as “Made in India”.

China expands into high-end sophisticated supply chains

As highlighted in our 2023 outlook, China has focused on supply chains that drive technology innovation/localisation and manufacturing upgrades. In fact, China had not lost any ground in global manufacturing as of 2021 (refer to Chart 1). China may lose market share in the supply chains of low-tech industries like textiles and footwear to Vietnam and Thailand while gaining a larger share of more sophisticated sectors such as EV and batteries exports.

Chart 1: China’s global manufacturing share still shows growth momentum

Source: World Bank Data, Morgan Stanley Research, as of 1 May 2023. Percentage figure represents China and US’s contribution to global manufacturing GDP.

Furthermore, China is adapting to supply-chain changes by moving up the quality scale in EV production. The country is self-reliant in the EV battery supply chain, and it’s estimated that China-made EV battery volume is more than double that of every other country combined⁷. China’s complete EV supply chain spans mining rare raw materials (cobalt, nickel), processing and refining (with government support in the form of cheaper land and labour), component manufacturing and battery assembly. Most global companies would need to partner with Chinese component manufacturers to enter or expand in the EV industry.

As mentioned earlier, businesses such as international OEMs, are unlikely to move their entire supply chains out of China, given the country is often their single largest market. Instead, they need to maintain access and strike a balance between customer proximity and manufacturing location. The manufacturing universe is also highly interconnected, and logistics must be managed to control costs. For example, around 45%⁸ of car parts and components used by auto firms in the US and Europe have, at some stage, moved in and out of China.

We also believe that technology-savvy domestic auto suppliers will likely gain market share on the back of localisation efforts in China. Instead of sourcing their components elsewhere, international OEMs may need to increase their reliance on China-based suppliers.

3. China-US relations have been under pressure since 2018, and the tech race has been raised as a market concern. How could this impact China’s medium to longer-term structural growth story?

In addition to boosting middle-class consumption and becoming more self-reliant, China must focus on business-model innovation, technology localisation and advanced manufacturing. Our team has identified opportunities in the automation and artificial intelligence (AI) space:

1) Automation is a fast-growing area that rides on the trend of labour replacement owing to i) rising wages and labour shortages on ageing populations, and ii) the rapid expansion of emerging end markets such as consumer electronics, automobiles, batteries, solar/semiconductors.

Chart 2: China’s self-sufficiency rate in automation products (2021 vs. 2025)

Source: Ministry of Industry and Information Technology, as of August 2022.

Amid the push for greater technological self-sufficiency, China has set a goal of doubling industrial robot density from 2020 to 2025. We expect domestic leaders in industrial robots to benefit from the trend as they possess the industry know-how in local markets and understand import substitution demand from customers in China.

In a broad sense, automation can be sub-categorised into factory and process automation. Within China, 41% of the automation market is factory automation⁹ (also known as discrete automation), whereas process automation represents the remainder, i.e., 59%.

Chart 3: China’s factory automation sales by downstream area (2021)

Source: MIR Databank, HSBC Qianhai Securities, as of August 2022.

In terms of the sales breakdown (by industry) for factory automation in 2021, machine tools represented 25% of the total, followed by semiconductor & solar (12%), textiles (6%), elevators (5%), and lithium batteries (LIB) (5%).

We believe that industrial robotic manufacturers with leading market positioning, vertical integration capabilities, and margin improvement potential for localised components could outperform. We expect improving new-order flows as industrial capex picks up.

2) AI: According to International Data Corporation (IDC), global revenue for the AI market, including software, hardware, and service sales, is expected to increase at a CAGR (2022-2026) of 19% to reach US$900 billion by 2026. China’s AI investment is expected to reach US$26.69 billion by 2026¹⁰, accounting for 8.9% of global investment.

Large language models (LLMs) (also known as Foundation Models) use deep learning in natural language processing (NLP). An LLM is a transformer-based neural network that predicts the text that is likely to come next. The development of LLMs is significant as it can adapt to a wide range of tasks.

On the regulatory front, the Cyberspace Administration of China (CAC) drafted measures to manage generative AI services and encourage the use of safe and reliable software, tools and data resources¹¹. This echoes President Xi Jinping’s call to develop AI technology amid the race with the US and reflects the government’s objective of building its own governance universe.

Within the AI supply chain, we believe that Mainland China hardware and software companies as well as Taiwanese hardware firms exposed to AI infrastructure, components and applications could benefit.

In terms of hardware requirements, semiconductors and networking infrastructure are expecting a boom from AI training and interface perspectives. Major components required for a machine learning model include i) logic processors (i.e., to perform parallel computations), ii) memory (especially with DRAM with high bandwidth), and iii) networking equipment (e.g., switches and routers to link servers to cloud/edge devices). For software, China’s internet giants and start-ups have started to develop homegrown OpenAI capabilities, e.g., the integration of AI into web browsers, customer messaging tools, education software, industrial software for the retail and finance industries, and online gaming.

We believe that software leaders with significant customer bases could benefit from subscription-based revenues derived from future AI applications. Content creators and advertising platforms have already started using AI to improve efficiency and lower development costs.

Chart 4: LLMs (Foundation Models): what are they good for?

Source: Center for Research on Foundation Models (CRFN), Stanford University Institute for Human Cantered Artificial Intelligence. LLMs can centralize information from several data modalities to adapt to a wide range of tasks from answering questions, to extracting information and identifying images. For illustrative purposes only.

Conclusion

Overall, we expect China’s service-led economic recovery to continue throughout 2023. We also believe that i) improving retail sales, ii) property market stabilisation, and iii) reducing regulatory headwinds for sub-sectors (e.g., online gaming), the promotion of AI development and support for the platform economy are all encouraging.

China is adapting to supply-chain changes and moving up the manufacturing quality scale. With rising demand for advanced manufacturing, domestic automation suppliers will likely gain market share.

The technology localisation trend remains intact. We believe, AI/software, semiconductor equipment, and hardware technology companies with strong R&D capability should thrive and gain market share. Selective gaming companies should see better top-line growth on the back of gaming approvals.

Download full PDF

1 National Bureau of Statistics in China, Bloomberg, as of 18 April 2023: domestic demand for goods and services rebounded and drove up retail sales; Ministry of Culture and Tourism, as of 6 April 2023: domestic tourism (leisure and business) has rebounded to over 80% of 2019 levels.

2 Morgan Stanley. Traditional industries include automotive, aerospace, energy, food & beverage through to consumer appliances, furniture, and textiles.

3 Morgan Stanley Research.

4 Morgan Stanley Research.

5 China’s Ministry of Commerce. As of end-2020, the foreign direct investment (FDI) from China in Mexico totally amounted to approximately US$1.17 billion.

6 U.S. – Mexico – Canada Agreement (USMCA), 15 May 2023.

7 Estimates from Benchmark Minerals, a consulting group.

8 Morgan Stanley Research.

9 HSBC Qianhai Securities, data as of 2021. Process automation refers to the product of a continuous stream of products, e.g., chemicals, power, steel, refineries, etc. which typically needs more software than factory automation given the data analysis required. Both factory automation and process automation will require control systems. Also, process automation is typically project-based whereas factory automation is usually OEM-based.

10 IDC CHINA –2023 China AI Market Spending forecast, 29 March 2023.

11 Reuters, 11 April 2023.

Hong Kong/Mainland China market update

Despite the market fall, we believe that the China Q4 2023 GDP growth trend has already been priced into the index, with some bright spots being neglected. Mainland China’s four mega trends (i.e., the “4As”) remain intact as better-than-expected inventory destocking and increased policy measures suggest a potential bottoming of the economy.

Read more
India’s bond index inclusion: Attracting foreign investment; bolstering its regional position

Indian government bonds would be included in the JPMorgan Government Bond Index-Emerging Markets (GBI-EM) Global index suite starting in June 2024. We examine the short- and long-term implications of this significant decision for the Indian bond market.

Read more
Index inclusion reinforces India’s transition to its next stage of growth

We explain how India’s impending inclusion in the JPMorgan Government Bond Index- Emerging Markets (GBI-EM) index should lead to an increase in global inflows.

Read more

See all

Hong Kong/Mainland China market update

Despite the market fall, we believe that the China Q4 2023 GDP growth trend has already been priced into the index, with some bright spots being neglected. Mainland China’s four mega trends (i.e., the “4As”) remain intact as better-than-expected inventory destocking and increased policy measures suggest a potential bottoming of the economy.

read more
India’s bond index inclusion: Attracting foreign investment; bolstering its regional position

Indian government bonds would be included in the JPMorgan Government Bond Index-Emerging Markets (GBI-EM) Global index suite starting in June 2024. We examine the short- and long-term implications of this significant decision for the Indian bond market.

read more
Index inclusion reinforces India’s transition to its next stage of growth

We explain how India’s impending inclusion in the JPMorgan Government Bond Index- Emerging Markets (GBI-EM) index should lead to an increase in global inflows.

read more

see all

ABOUT US

OUR FUNDS

RESOURCES

Disclosures on Climate-related Risk Management

Climate Metrics Disclosure

Pre-contractual Disclosure

Disclosures on Liquidity Risk Management

This website may contain information provided, compiled or arrived at from sources believed to be reliable but Manulife Investment Management (Hong Kong) Limited does not make any representation as to the accuracy, correctness, usefulness or completeness of the information on this website and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein.

Please take note that information provided here is for your reference only. No information contained here should be relied upon as investment advice or regarded as a substitute for any investment advice.

Investment involves risk. Investors should not only base on this website alone to make investment decisions and should read the offering documents for details, including the risk factors, charges and features of the products and services. This website has not been reviewed by the Securities and Futures Commission of Hong Kong. Issued by Manulife Investment Management (Hong Kong) Limited.

General Risk Disclosure

Funds offered on this platform may invest in equity, fixed income securities, exchange-traded funds, collective investment schemes and/or other instruments, including derivatives, and each of which has its specific investment objective/ policy with its specific features and different risk profile.
Distribution of dividends, the frequency of distribution and the amount/rate of dividends are not guaranteed. Dividend of certain share/unit classes, at the fund or the investment manager’s discretion, may be paid out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share/unit of the respective share/unit classes after the distribution date.
Some funds may invest in bonds or debt securities which may be subject to credit, liquidity, counterparty and market risks.
Some funds may invest in non-investment grade bonds and unrated securities which may be subject to greater credit and liquidity risks, and may be more volatile than higher rated securities. Some funds may invest in investment grade debt securities, which may be subject to ratings downgrades by the rating agencies that may affect the net asset value of the fund.
Some funds may invest in derivative instruments which may involve additional risks. (For example, leverage may cause greater volatility.)
Some funds may make extensive use of derivatives including more complex derivative instruments or strategies to achieve the investment objective, this may give rise to additional exposure in that performance may rise or fall more than it would have done otherwise. In adverse situations, the fund’s use of derivative instruments may become ineffective and the fund may suffer significant losses. The use of derivatives may give rise to leverage, liquidity, counterparty and valuation risks.
Some funds may invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
Some funds may invest in securities of small and/or medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
Some funds may invest in a single country/region and/or a particular industry sector which may be concentrated and subject to greater risks than diversified investments in several countries and/or regions and across sectors.
Some funds may invest directly in certain China A shares via the Stock Connect, which may involve risks related to investments via the Stock Connect and Mainland China investment.
Some funds may have significant exposure to Renminbi ("RMB") bonds/equity/assets or emerging markets, which will be subject to debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with more established markets.
Some funds with significant exposure to RMB bonds/equity/assets may hold a significant portion of assets in deposits if there are not sufficient RMB instruments to invest in. This may adversely affect the funds’ return and performance.
Some funds using Qualified Foreign Institutional Investor (“QFII”) quota to invest directly in debt instruments/shares in Mainland China may be subject to various requirements and restrictions under the laws of Mainland China related to QFII investment and custodial risks.
Some funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
As RMB is not freely convertible, currency conversion is subject to exchange controls and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds with substantial RMB exposure may be more volatile than that of a fund having a more diverse portfolio of investments.
Some funds’ performance will be closely tied to the economic, political, regulatory, geopolitical, market, currency or other conditions in the European Economic Area and may be subject to increased liquidity, price, and foreign exchange risk.
Some funds may invest in Russia and some investments in Russian securities may be unlisted securities not dealt on a regulated market. The Russian market presents specific risks in relation to the settlement and safekeeping of securities.
Investment involves risk. Investors may expose to capital loss and should not invest solely based on the information on this website alone and should read the offering documents for details including the associated risk factors, charges and features of the funds and their share/unit classes. Past performance information is not indicative of future performance.

Manulife Global Fund

Manulife Global Fund is an umbrella fund comprising a number of sub-funds investing in equity and/or fixed income securities, each of which has a different investment objective and risk profile and may involve equity market, geographical concentration, sovereign debt, liquidity, volatility, credit downgrade, interest rate, counterparty risks.
The relevant distributing class of the sub-funds does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of certain sub-funds in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of these sub-funds amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the sub-funds.
Certain sub-funds invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
Certain sub-funds invest in securities of small and medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
Certain sub-funds concentrate their investments in a single country and/or a particular industry sector are subject to greater risks than diversified investments in several countries and/or regions and across sectors.
Certain sub-funds may invest directly in certain China A shares via Stock Connect, which may involve in risk related to Investments via Stock Connect and Mainland China investment.
Investment involves risk. The sub-funds may expose their investors to capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds and their share classes.
Each sub-fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk.
Given RMB is currently not a freely convertible currency, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation. Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of certain sub-funds.

Manulife Advanced Fund SPC

Manulife Advanced Fund SPC is an umbrella fund comprising a number of sub-funds investing primarily in equity and bond securities, each of which has a different investment objective and risk level.
The sub-funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. A sub-fund may at its discretion pay dividend out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share of the respective share classes after the distribution date.
Certain sub-funds with significant exposure to Renminbi (“RMB”) bonds/equity/assets or emerging markets, may involve debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with the world's more established markets.
A bond sub-fund may hold a significant portion of assets in deposits if there are not sufficient RMB instruments for it to invest in. This may adversely affect its return and performance.
Certain sub-funds using invest directly in debt instruments/shares via QFII regime, the Bond Connect and/or the Foreign Access Regime are subject to various requirements and restrictions under the laws of Mainland China related to investment in QFII and/or China Interbank Market and custodial risks.
RMB is not freely convertible and is subject to exchange controls and restrictions.
Certain sub-funds may have significant concentrated exposures to particular industry sectors and geography's, which subjects investors to concentration and equity market risk.
Certain sub-funds may invest in equities of small- and mid-capitalization companies, which can expose investors to liquidity and volatility risks, and is subject to greater risk than is customarily associated with investments in larger capitalization companies.
Investment involves risk. The sub-funds may expose to a high risk of capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds.

Manulife Hong Kong Series

Manulife Hong Kong Series (“the Series”) is an open-ended unit trust comprising a number of funds primarily investing in equities, debt securities, exchange-traded funds and/or collective investment schemes, each of which has a different investment objective and risk level.
The funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of capital and/or out of gross income of certain funds in respect of Inc classes, while charging/paying all or part of certain funds’ fees and expenses to/out of capital of certain funds. This represents a return or a withdrawal of part of an investor's original investment amount or capital gain attributable to that amount. Distributions will result in an immediate decrease in the net asset value of the relevant units. Class AA (RMB) Inc Hedged Unit of certain funds is subject to higher distribution risks than other non-hedged unit classes.
Certain funds may involve equity market, emerging markets, Dim Sum bond market, concentration, volatility, liquidity, credit, credit ratings, below investment grade and unrated securities, credit rating downgrading, interest rates, valuation, sovereign debt, unlisted debt securities, political and regulatory, currency, foreign exchange, derivative and structured product, hedging, and distribution risks.
Certain funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
Certain fund is subject to the risks of investing in other funds and the risks relating to investment in exchange traded funds, Strategic and Tactical Asset Rebalancing Strategy (“STARS”), small- and mid-capped companies, convertible bonds and the risks associated with securitised debt instruments and investments in loss-absorption features. Certain fund is a feeder fund that invests all or substantially all of its assets in another collective investment scheme (the “master fund”) and is therefore subject to the risks of investing in the master fund.
As RMB is not freely convertible, currency conversion is subject to exchange controls, and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds may be more volatile than that of a fund having a more diverse portfolio of investments.
Certain fund will not have direct investments other than cash, cash equivalents and financial derivative instruments (such as futures, options and forwards).
Investment involves risk. The funds may expose its investors to capital loss. Investors should not make investment decisions based on this material alone but should read the offering document for details, including the risk factors, charges and features of the Fund and its unit classes.

General Risk Disclosure

Funds offered on this platform may invest in equity, fixed income securities, exchange-traded funds, collective investment schemes and/or other instruments, including derivatives, and each of which has its specific investment objective/ policy with its specific features and different risk profile.
Distribution of dividends, the frequency of distribution and the amount/rate of dividends are not guaranteed. Dividend of certain share/unit classes, at the fund or the investment manager’s discretion, may be paid out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share/unit of the respective share/unit classes after the distribution date.
Some funds may invest in bonds or debt securities which may be subject to credit, liquidity, counterparty and market risks.
Some funds may invest in non-investment grade bonds and unrated securities which may be subject to greater credit and liquidity risks, and may be more volatile than higher rated securities. Some funds may invest in investment grade debt securities, which may be subject to ratings downgrades by the rating agencies that may affect the net asset value of the fund.
Some funds may invest in derivative instruments which may involve additional risks. (For example, leverage may cause greater volatility.)
Some funds may make extensive use of derivatives including more complex derivative instruments or strategies to achieve the investment objective, this may give rise to additional exposure in that performance may rise or fall more than it would have done otherwise. In adverse situations, the fund’s use of derivative instruments may become ineffective and the fund may suffer significant losses. The use of derivatives may give rise to leverage, liquidity, counterparty and valuation risks.
Some funds may invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
Some funds may invest in securities of small and/or medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
Some funds may invest in a single country/region and/or a particular industry sector which may be concentrated and subject to greater risks than diversified investments in several countries and/or regions and across sectors.
Some funds may invest directly in certain China A shares via the Stock Connect, which may involve risks related to investments via the Stock Connect and Mainland China investment.
Some funds may have significant exposure to Renminbi ("RMB") bonds/equity/assets or emerging markets, which will be subject to debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with more established markets.
Some funds with significant exposure to RMB bonds/equity/assets may hold a significant portion of assets in deposits if there are not sufficient RMB instruments to invest in. This may adversely affect the funds’ return and performance.
Some funds using Qualified Foreign Institutional Investor (“QFII”) quota to invest directly in debt instruments/shares in Mainland China may be subject to various requirements and restrictions under the laws of Mainland China related to QFII investment and custodial risks.
Some funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
As RMB is not freely convertible, currency conversion is subject to exchange controls and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds with substantial RMB exposure may be more volatile than that of a fund having a more diverse portfolio of investments.
Some funds’ performance will be closely tied to the economic, political, regulatory, geopolitical, market, currency or other conditions in the European Economic Area and may be subject to increased liquidity, price, and foreign exchange risk.
Some funds may invest in Russia and some investments in Russian securities may be unlisted securities not dealt on a regulated market. The Russian market presents specific risks in relation to the settlement and safekeeping of securities.
Investment involves risk. Investors may expose to capital loss and should not invest solely based on the information on this website alone and should read the offering documents for details including the associated risk factors, charges and features of the funds and their share/unit classes. Past performance information is not indicative of future performance.

Manulife Global Fund

Manulife Global Fund is an umbrella fund comprising a number of sub-funds investing in equity and/or fixed income securities, each of which has a different investment objective and risk profile and may involve equity market, geographical concentration, sovereign debt, liquidity, volatility, credit downgrade, interest rate, counterparty risks.
The relevant distributing class of the sub-funds does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of certain sub-funds in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of these sub-funds amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the sub-funds.
Certain sub-funds invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
Certain sub-funds invest in securities of small and medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
Certain sub-funds concentrate their investments in a single country and/or a particular industry sector are subject to greater risks than diversified investments in several countries and/or regions and across sectors.
Certain sub-funds may invest directly in certain China A shares via Stock Connect, which may involve in risk related to Investments via Stock Connect and Mainland China investment.
Investment involves risk. The sub-funds may expose their investors to capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds and their share classes.
Each sub-fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk.
Given RMB is currently not a freely convertible currency, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation. Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of certain sub-funds.

Manulife Advanced Fund SPC

Manulife Advanced Fund SPC is an umbrella fund comprising a number of sub-funds investing primarily in equity and bond securities, each of which has a different investment objective and risk level.
The sub-funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. A sub-fund may at its discretion pay dividend out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share of the respective share classes after the distribution date.
Certain sub-funds with significant exposure to Renminbi (“RMB”) bonds/equity/assets or emerging markets, may involve debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with the world's more established markets.
A bond sub-fund may hold a significant portion of assets in deposits if there are not sufficient RMB instruments for it to invest in. This may adversely affect its return and performance.
Certain sub-funds using invest directly in debt instruments/shares via QFII regime, the Bond Connect and/or the Foreign Access Regime are subject to various requirements and restrictions under the laws of Mainland China related to investment in QFII and/or China Interbank Market and custodial risks.
RMB is not freely convertible and is subject to exchange controls and restrictions.
Certain sub-funds may have significant concentrated exposures to particular industry sectors and geography's, which subjects investors to concentration and equity market risk.
Certain sub-funds may invest in equities of small- and mid-capitalization companies, which can expose investors to liquidity and volatility risks, and is subject to greater risk than is customarily associated with investments in larger capitalization companies.
Investment involves risk. The sub-funds may expose to a high risk of capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds.

Manulife Hong Kong Series

Manulife Hong Kong Series (“the Series”) is an open-ended unit trust comprising a number of funds primarily investing in equities, debt securities, exchange-traded funds and/or collective investment schemes, each of which has a different investment objective and risk level.
The funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of capital and/or out of gross income of certain funds in respect of Inc classes, while charging/paying all or part of certain funds’ fees and expenses to/out of capital of certain funds. This represents a return or a withdrawal of part of an investor's original investment amount or capital gain attributable to that amount. Distributions will result in an immediate decrease in the net asset value of the relevant units. Class AA (RMB) Inc Hedged Unit of certain funds is subject to higher distribution risks than other non-hedged unit classes.
Certain funds may involve equity market, emerging markets, Dim Sum bond market, concentration, volatility, liquidity, credit, credit ratings, below investment grade and unrated securities, credit rating downgrading, interest rates, valuation, sovereign debt, unlisted debt securities, political and regulatory, currency, foreign exchange, derivative and structured product, hedging, and distribution risks.
Certain funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
Certain fund is subject to the risks of investing in other funds and the risks relating to investment in exchange traded funds, Strategic and Tactical Asset Rebalancing Strategy (“STARS”), small- and mid-capped companies, convertible bonds and the risks associated with securitised debt instruments and investments in loss-absorption features. Certain fund is a feeder fund that invests all or substantially all of its assets in another collective investment scheme (the “master fund”) and is therefore subject to the risks of investing in the master fund.
As RMB is not freely convertible, currency conversion is subject to exchange controls, and restrictions. There can be no assurance that RMB will not be subject to devaluation. Insufficient amount of RMB for currency conversion or devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated class(es) of certain funds. The “Dim Sum” bond market is still a relatively small market which is more susceptible to volatility and illiquidity. Due to RMB concentration risk, the value of the funds may be more volatile than that of a fund having a more diverse portfolio of investments.
Certain fund will not have direct investments other than cash, cash equivalents and financial derivative instruments (such as futures, options and forwards).
Investment involves risk. The funds may expose its investors to capital loss. Investors should not make investment decisions based on this material alone but should read the offering document for details, including the risk factors, charges and features of the Fund and its unit classes.