Winners rationale

In response to a prolonged period of strong credit growth, fiscal stimulus and the support of the property market, Chinese economic growth stabilised in the past year. Accordingly, Greater China equities have staged a strong rally in 2017, with the MSCI China Index up almost 54%.

Liquidity remained robust and was further supported by stock connect schemes from Mainland China (Shanghai and Shenzhen) to Hong Kong, and capital inflow from foreign institutional investors.

Valuations of China equities became relatively stretched, compared to historical levels, following a series of strong rallies last year. Although, with forward price-to-earnings ratio and price-to-book trending towards 15 and 19 times, the region’s equity market was still attractively valued compared to those developed counterparts.

Market inefficiencies within the region, highlighted by a largely unsophisticated and active retail investor base, will continue to benefit bottom-up active managers, such as First State Investments, which achieved even stronger performances than the already stunning benchmark.

Based on high conviction, bottom-up stock selection and a strong emphasis on high quality proprietary research, the firm’s investment philosophy is founded on the concept of stewardship. It believes investment ought to have a social purpose and, namely, the efficient allocation of clients’ assets to high quality companies at sensible prices.

As an independent investment management team within First State Investments, First State Stewart Asia manages a total AUM of US$24.8 billion – as of 31 December 2017 – a significant portion of which is dedicated to Greater China equities. Along with other Asian equity strategies, the firm’s Greater China Equity fund is managed by the fund manager’s Asia team, which comprises 18 investment professionals across Hong Kong, Singapore and Edinburgh.

First State Investments has been chosen by Asia’s selectors as Best Fund Provider – Greater China Equity.