July 2014 1.Macroeconomic Referred to the latest economic data in July, 2014, the recovery of employment market is going on. The non-agriculture employment data is worse than the market-expectation, and labor market participation ratio is still stabilized at relative low level, the unemployment rate is back to 6.2%. From the high-frequency data (weekly jobless claims), the employment market is still on the recovery track. On the other hand, Some other real economic data performed well continuously, such as manufacture orders or consumptions, and so on. The Euro-zone real economy continue showing the signs of stabilization at bottom, but the uncertainty of economy recovery is increasing due to the Ukraine Crisis. ECB is still preparing more QE policy in the future, which shows more signs of future loosen policies, which make the market expectation of loosen monetary policy getting stronger. China‘s economy recovery seems to be lower than expectation base on the data in July. The engine of economy recovery is still the government supporting policies, but meanwhile the real estate market is still getting worse in short-term and moreover the finance data is much worse than expectation. Base on the high frequency data and also referred to the macro-economy data over July, the economy had not show the strong signs of internal demands recovery The structure of PMI and other economic data indicated that the de-leverage process is still in process in short-term. Although it has a short-term rebound, the growth trend of liquidity is getting slower. The inflation data was still remaining at relative low level (especially on PPI). 2. Stock Market In July, government continued to eject liquidity into the economy to hedge the pressure of a sliding economy, which prolonged the bounce of Shanghai Composite/Shenzhen Composite. By the end of the month, Shanghai Composite Index rise 8.1%, and Shenzhen Composite rise 6.72%. Nonferrous metal sector had a outstanding performance. IndexPercentage [%] VolumeAmount Turnover[%] [million] SH stocks 8.10307,762.122,469,635.9417.14 HS300 9.30189,191.761,618,285.4712.05 Small stocks 4.4425,904.48404,822.6243.76 SZ stocks 6.72278,286.873,038,817.0052.45
July 2014 3.Fixed-income market Bond issuance increased YOY in July. In July, 486 new bonds were issued, increasing by 2.55% with a total amount of 966.442bln, among which the central clearing and settlement company issued 128 new bonds, with a total amount of 606.702bln, accounting for 62.78% of the total; the ShangHai clearing and settlement company issued 305 new bonds this month, with a total amount of 338.43bln and accounting for 35.02% of the total; the Exchange issued 53 new bonds this month, with a total amount of 21.31bln and accounting for 2.2% of the total. Money market kept stable and the bond trading increased YOY in July. Generally, money market kept stable in July. The 1D repo was closed at 3.23%, increased by 30BP compared to last month, average turnover was 661.83bln, decreased 13.1% MOM; The 7D repo was closed at 4.02%, increased by 2BP compared to last month, average turnover was 140.87bln, increased 12.7% MOM. In July, the trading volume of the bond market in 23 trading days was 33.08 trillion, increased 57% YOY. The volume in the central clearing and settlement company was 22.68 trillion, increased 66.33% YOY, accounting for 68.56% of the total. The volume in Shanghai clearing and settlement company was 2.31 trillion, increased 305% YOY, accounting for 6.97% of the total; The volume in the Exchange was 8.09 trillion, increased 18% YOY, accounting for 24.47% of the total. There were 90750 trading (excluding counter), increased 57.24% YOY. Average daily trading volume was 985.812bln and increased 66.31% YOY. There were average 3945 trading in July each day, increased by 57.24% YOY.
July 2014 4. Mutual Fund Market Close-ended funds: In June, close-ended funds changed 2.24% on average. Since the beginning of 2014, close-ended funds have changed 0.66%. Open-ended funds: In June, hybrid funds, equity funds, index funds changed 2.53%, 4.17%, 8.78% respectively. Since the beginning of 2014, capital preservation funds, hybrid funds, equity funds, index funds have changed 2.82%, 2.39%, 3.97% respectively 。 Bond funds: In June, bond funds changed 0.78% on average. Since the beginning of 2014, bond funds have changed 5.65% on average.
July 2014 Generali China - Unit Linked Growth Fund NameGrowth Investment Objective The objective is to maximize return in the medium-long run with a medium to high risk level. Launch Date2004.9.30 CurrencyRMB Investment Scope This fund mainly invest in equities as open-end, close-end mutual fund, fixed income securities (government, financial and corporate bond and central bank notes, etc.) and other instruments approved by CIRC. Management Fee1.5% per year Latest Price (8/29/2014) Target Clients This account is a medium aggressive account. This fund may be quite volatile and it is only suitable for long-term investors. Price 2.1587 Fund Description 1 Month3 Months12 MonthsYTDSince Inception Net Asset Value 1.69%7.27%12.22%10.41%115.87% Shanghai T-bond Index 0.31%0.85%2.96%2.31% Shanghai & Shenzhen 300 Index -0.51%8.43%1.05%0.35% Performance Performance Chart and Allocation Portfolio review and outlook: In July, liquidity situation has improved obviously since the RE sector felt more pressure. The market continued to rebound. We believe that the effect of bad economic expectation on the equity market has been weakened and liquidity is good for stabilizng the economy and the market. We remained our position at overweight and focus more on steady growth companies’ stocks. In terms of fixed-income, we maintained the portfolio liquidity and kept standard weight. In next 1-3 months, we will adjust the duration of bonds to around 3 year and the holding will be concentrate on AA+ - AAA corporate bonds. Market & Portfolio Comments
July 2014 Generali China - Unit Linked Stable Fund NameStable Investment Objective Achieving the best match of stable investment return and good assets liquidity with a low risk level in the medium-long run. Launch Date2004.9.30 CurrencyRMB Investment Scope The investments focus on fixed income products and money market funds. A small percentage may be invested in equity exposed instruments as mutual funds. Other CIRC approved instruments investment is allowed. Management Fee1.25% per year Latest Price (8/29/2014) Target Clients This is a conservative account, suitable for clients with a low risk bearing ability and stable investment return needs. Price 1.6486 Fund Description Performance Chart and Allocation Portfolio review and outlook: The macro-economic data of July proves the previous market expectation of weak internal economic demand. The total social financing data in July experienced a sharp decline. However, we do not need to overestimate the impact of a single month. The economic stability in the next half of 2014 can rely on external demand and government infrastructural stimulus policy. A circumstance of loosen monetary policy can also be expected. In terms of investment strategy, we prefer to keep the low duration, and add some leverage for long-term bond swing trade in middle and long duration bonds. The equity position will keep neutral. Market & Portfolio Comments 1 Month3 Months12 MonthsYTDSince Inception Net Asset Value 1.44%2.93%5.57%6.90%64.86% Shanghai T-bond Index 0.31%0.85%2.96%2.31% Shanghai & Shenzhen 300 Index -0.51%8.43%1.05%0.35% Performance