Take part in China’s
success story

Navigating change and finding
opportunity in the world's second largest economy

The Investment Case

China has long been a global growth engine…

With favorable long-term fundamentals, economic expansion and rising consumer wealth.

0% in 2016

China accounted for 28% of global GDP growth –
a trend that is likely to continue.

China
35.2%

Total
34.4%

% of estimated global growth
2017-2019 (in real GDP)

Based on 2016 GDP estimates from International Monetary Fund (IMF). 2017 to 2019 predictions from the World Bank. There is no guarantee that any estimates or projections will be realised.

Source: International Monetary Fund, Visualcapitalist.com, McKinsey Global Institute Cityscope 1.0; Report as of June 2017

The economy has undergone a remarkable transformation

Consumer and Services share of GDP overtaking Manufacturing and Construction

60%
50
40
30
20
10
0

Manufacturing & Construction

Consumer & Services

1981

1985

1989

1993

1997

2001

2005

2009

2013

1H17

Consumer and Services overtakes Manufacturing and Construction

Source: CEIC

Manufacturing & Construction refers to mining and quarrying, manufacturing, production and supply of electricity, water and gas, and construction.

Consumer & Services refers to all other economic activities including real estate, finance, wholesale and retail, transportation and other service industries, excluding manufacturing, agriculture, forestry, animal husbandry and fishery and services in support of these industries.

It has rebalanced towards the private sector…

450
400
350
300
250
200
150
100
50
0

Millions

1991

1996

2001

2006

2011

2016

State-controlled urban employment

Private urban employment

Source: FactSet Research Systems and Bloomberg

… and diversified with a shift towards services and consumption

Tech Travel Health care E-Commerce Banks Exporters Heavy industry

Allocation opportunities

Investment opportunities in China continue to expand and change due to…

Growing
domestic wealth

Technological
innovation

Entrepreneurship

Financial
reform

The liquidity, depth and breadth of China's listed companies is now second only to the U.S.

Number of listed Chinese companies with a market cap greater than US$50 million

5,000
4,000
3,000
2,000
1,000
0

810
companies

1,753
companies

5,018
companies

2000,
excl A-shares

Aug 2017,
excl A-shares

Aug 2017,
incl A-shares

Real Estate

Telecommunication Services

Utilities

Energy

Health Care

Consumer Staples

Materials

Information Technology

Industrials

Financials

Consumer Discretionary

Sources: FactSet Research Systems and Bloomberg


At Matthews Asia, we offer three active approaches that seek to participate in China's success story.

Matthews Asia's first China-focus Fund seeks to identify companies that stand to benefit from domestic consumption generated by rising personal wealth among Chinese consumers.

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Features

  • 40-45 stocks
  • All-cap
  • Long-term growth

Inception Date

  • February 19, 1998
  • 26 February 2010

Best return in the
Morningstar 500 for 2017

Overall Morningstar Rating
31/03/2018

Portfolio Manager
Andrew Mattock, CFA

Source: "Fund News" by R. Kinnel. © 2018 Morningstar, Inc. All Rights Reserved.

Fund Ratings represent an opinion only and are not a recommendation to buy or sell any fund.

The best return of the Morningstar 500 for 2017 is as of 12/31/17. Morningstar narrows down the more than 7,000 funds available based on monthly performance data on the top 500 funds.  Morningstar picks winning funds with superior management and quantitative characteristics linked to strong performance by using their comprehensive mutual fund database and then supplements those studies with extensive qualitative research of portfolio managers.

©2018 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar not its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Fund focuses on innovative, efficient and sustainable growth companies, with an emphasis on businesses oriented toward domestic demand and rising income levels.

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Features

  • 40-60 stocks
  • Small-cap
  • Long-term growth

Inception Date

  • May 31, 2011
  • 29 February 2012

Overall Morningstar Rating
3/31/2018

Overall Morningstar Rating
31/03/2018

Portfolio Manager
Tiffany Hsiao, CFA

The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns.

Fund Ratings represent an opinion only and are not a recommendation to buy or sell any fund.

©2018 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar not its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Fund invests in companies that offer meaningful dividends yields, have sustainable business models and that demonstrate the propensity to pay increasing dividends over time.

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Features

  • 30-60 stocks
  • All-cap
  • Growth and Income

Inception Date

  • November 30, 2009
  • 31 January 2013

Overall Morningstar Rating
03/31/2018

Overall Morningstar Rating
31/03/2018

Portfolio Manager
Yu Zhang, CFA

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns.

Fund ratings represent an opinion only and are not a recommendation to buy or sell any fund.

©2018 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar not its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Research and Insights

Explore our in-depth coverage of the changes and opportunities in China.

Tiffany Hsiao, CFA

Portfolio Manager

China: Dispelling the Myths

Watch the video

Andy Rothman

Investment Strategist

Sinology: The Other China Story

Learn more

Robert Horrocks

Chief Investment Officer

Perspectives: Quality of Growth Adds Stability to China's Economic Engine

Learn more


Our Team

Since Matthew Asia's founding in 1991, our focus has been on investing actively in Asia.

We seek to generate attractive returns by actively managing our portfolios and conducing in-depth, on-the-ground fundamental research to identify the most compelling opportunities while minimizing downside risk.

Our 46 investment team members offer deep experience that helps us to navigate change and find opportunity in China, helping you capitalize on its long-term growth potential.

46
Investment team members

85%
lived or worked in Asia

72%
are Asian language speakers

14
years average Asia investment experience

Investment team members discussed include employees of Matthews Asia and its subsidiaries. Data as of 03/31/201831/03/2018

Data as of 31/03/2018

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Thank you for your interest

This document is not for public distribution and is for professional investors within the meaning of the Securities and Futures Ordinance (including professional investors as defined by the Securities and Futures (Professional Investors) Rules) only and has not been registered with, or approved by, any regulatory authority in any jurisdiction.

Matthews Asia is the brand for Matthews International Capital Management, LLC and its direct and indirect subsidiaries.

The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information. The views and information discussed herein are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles.

Matthews International Capital Management, LLC is the Investment Manager to the Matthews Asia Funds and is a U.S.-based investment adviser registered with the U.S. Securities and Exchange Commission who has not represented and will not represent that it is otherwise registered with any other regulator or regulatory body.

Investments involve risk. Past performance is no guarantee of future results. The value of an investment in the Fund can go down as well as up. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation.

This document does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. It is the responsibility of any persons wishing to subscribe for shares to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions. Prospective investors should consult professional legal, tax and financial advisers as to the suitability of any investment in light of their particular circumstances and applicable citizenship, residence or domicile. An investment in the Matthews Asia Funds is not available to investors in all jurisdictions; it is not available to U.S. Persons.

Investors should not invest in a Fund solely based on the information in this document. Investors should carefully consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds before making an investment decision. The current prospectus, Supplement for Hong Kong Investors, Product Key Facts Statements or other offering documents ("Hong Kong Offering Document") contain this and other information and can be obtained by Professional Investors by visiting hk.matthewsasia.com. Please read the Hong Kong Offering Document carefully for further details including risk factors before investing.

The Funds invest primarily in equity securities, which may result in increased volatility. It is possible to lose the principal capital of your investment. The Funds may invest in Asian countries and economies. Investments in Asian economies involve certain risks and special considerations such as greater political, tax, economic and regulatory risks. Additional risks relate to liquidity and the repatriation of capital and income due to currency controls which may adversely impact the value of Fund holdings. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies. Focused funds may be subject to greater share price volatility as a larger portion of their assets may be invested in the securities of a single issuer compared to diversified funds. Distribution of dividends, if any, is not guaranteed. There can be no guarantee that companies that the Funds invests in, and which have historically paid dividends, will continue to pay them or to pay them at the current rates in the future. The Funds do not hedge to attempt to offset certain market risks. This may expose the Funds to the risk of full losses resulting from a decline in a security's value. The Funds may hold investments denominated in multiple currencies. Movements in the exchange rate between these currencies and the base currency of the Funds may adversely affect performance.

The Funds may, at their discretion, pay dividends out of the capital or effectively out of capital in respect of the distribution shares. Payment of dividends out of capital and/or effectively out of capital represents a return or withdrawal of part of an investor's original investment, or from any capital gains attributable to that original investment. Such dividends may result in an immediate decrease of the net asset value of the relevant shares.

This document is issued in Hong Kong by Matthews Global Investors (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission in Hong Kong.