Investment Objective

The BOC-Prudential Hong Kong Equity Fund is an equity fund which aims to provide investors with long-term capital growth by investing at least 70% of the BOC-Prudential Hong Kong Equity Fund's non-cash assets in the Hong Kong equity sub-fund of the Umbrella Unit Trust. Under normal circumstances, the sub-fund will invest mainly in the listed equities and equity-related securities of companies operating in Hong Kong or linked either directly or indirectly to the Hong Kong economy, as permitted under Schedule 1 to the Regulation and the relevant codes and guidelines issued by the MPFA from time to time. The sub-fund may also invest in ITCIS and Other Permitted Securities. Where appropriate, cash, time deposits, money market or fixed income securities may be considered. The risk level of the BOC-Prudential Hong Kong Equity Fund is generally regarded as high.

Fund Details

Latest Fund Expense Ratio: 1.68%

Launch Date(dd/mm/yyyy): 15/04/2003

Unit Price: HKD 37.9511

Fund Size: HKD 7,170.12M

Fund Commentary

As expected, Hong Kong’s GDP growth for the fourth quarter of 2019 continued to ease, resulting in a recessionary trend for the year. The key drag was weaker service exports and investment, reflecting the impact of local social unrest in previous months on inbound tourism and business sentiment. The Government in its FY2020/21 Budget report unveiled a larger than market expected stimulus package, which we believe is well supported by the city’s ample fiscal reserves, and could help mitigate some of the near term cash flow stress of the private sector, reduce household burden and boost consumption. However, the multiplier effect of policy easing could be dampened by sluggish private sector sentiment, and downside risk to growth remains, due to continued uncertainty over the potential duration and severity of the COVID-19 outbreak. The market started the quarter on a fairly positive note with some signs of economic improvement. However, it took an abrupt turn in late January, following the outbreak of COVID-19 in China. Since then, market sentiment was very fragile resulting in big volatilities as the epidemic turns into a pandemic. The situation in China is improving and work resumption is underway. However, global demand remains the key uncertainty. Due to the massive lock down, we need to get the Coronavirus contained before economic supportive efforts by overseas governments could bear fruit. Sector wise, Information Technology was the best performer, in particular software and internet plays, as they benefit from progress in 5G development and the “work from home” trend. Financial was the worst performer, as falling interest rate put pressure on banks and insurance companies. In light of the uncertainties associated with development of the Coronavirus, we believe the market would remain highly volatile, with the possibility of challenging lower levels. We remain optimistic on China’s medium-term prospects and would look for opportunities to accumulate on industry leaders in event of market weaknesses, with preferences for exposure to domestic consumption and 5G related developments.

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