Chinese phone maker Xiaomi joins the portfolio
Asian stock exchanges saw a strong end to the year. Carnegie Asia rose 3.4 percent in December. Over the full year the fund rose 21.2 percent, and given the starting point in January this was better than expected.
The whole year was a balancing act between weaker economic performance and various stimulus measures. Most important was that the Fed changed its policy and cut interest rates in several stages. Alongside this, the trade war with the US led the stock market to rise and fall in sync with how negotiations progressed.
Asian stock exchanges were traded up this month as risk appetite swelled after China and the US agreed a “phase one” trade deal. The agreement includes increased Chinese purchases of US grain products, protection of patents and technology transfer, and a liberalisation of Chinese financial markets.
In return, the US will refrain from upping import tariffs on Chinese goods. The 15 percent import duties introduced in September are halved to 7.5 percent on imported goods worth USD 120 billion. This obviously benefits China the most.
China’s central bank increased its stimulus at the end of the month by lowering bank reserve requirements by 0.5 percentage points, which injects liquidity into the economy. Further stimulus can be expected in order to stem the economic slowdown.
Several changes were made to the portfolio this month. New investments were made in Xiaomi Corp, a leading Chinese mobile phone maker, and in Sunny Optical, which manufactures phone camera components.
The fund increased its holding in Samsung Electronics and sold its stake in Samsung SDI. An investment was also made in Alibaba when it was listed on the Hong Kong stock exchange, which increased the fund’s holding in this company. The following stocks were divested in December: Central Pattana and CP All in Thailand, HDFC Corp in India, and Hota Industries in Taiwan. Overall, we increased the fund’s exposure to China at the end of the year.