OP Kiina

OP-China

Huge dimensions, huge potential

China – the world’s largest export economy and a growing domestic market

The markets in Mainland China offer investors the possibility to invest in high-quality companies operating in fields of structural growth, which have to do with consumers, the ageing population, and technological innovations. They open up opportunities for technology-driven fronts where China is the forerunner and is aspiring towards a leading position. Good examples of such fields are self-driving cars, artificial intelligence, e-commerce and mobile payment, for example. In addition, China’s recent efforts to open its financial market broader to overseas operators have made it easier for international investors to access the opportunities offered by the country.

China’s growing middle class both supports and demands an increasingly sophisticated range of consumer products, and this demand is more often addressed by Chinese companies. At the same time, Chinese companies are climbing on the technology curve, moving from low-margin commodities to production offering higher added value and creating new opportunities in the consumer durables markets, food and beverage industry, entertainment and tourism. The positive steps taken in technology and automation are particularly brisk in the fields of tablet components, software services and factory automation. We also see innovative services as well as pharmaceutical research and product development in health care, and traditional Chinese medicine also contributes to this development.

Possible threats stemming from the macro-economy include trade relations between the United States and China, economic downturn on the real property market in China and the high indebtedness of state-owned companies. These macro-economy concerns are currently under scrutiny. The Finnish Government’s long-term path towards the sustainable restoration of balance is nevertheless positive, as major success has already been achieved in it.

Why does it pay to invest in OP-China?

  • The fund is suitable for an investor who wants to benefit from China’s fast economic growth.
  • The growing, increasingly wealthy middle class generates strong growth potential on China’s domestic market that has the world’s largest population.
  • OP-China is an interesting option for investors seeking high returns from strongly growing emerging markets.

The fund’s performance may fluctuate significantly depending on the market, and, in principle, its risk level is higher than that of funds investing in developed markets. The fund is also exposed to a notable currency risk since the fund's investments in China are made in yuans and those in Hong Kong and Taiwan, in turn, are made in US dollars. This fund is mainly recommended to investors who intend to redeem their units after nine years at the earliest.

As our owner-customer, you can buy, sell and switch OP-China fund units at no charge. Our selection of emerging market funds also includes six other funds. 

Subscription fee Annual management fee Redemption fee
0,75 % 2,50 % 0,75 %

Agreements under a systematic investment plan are not subject to subscription fees. Fund units generate OP bonuses.

The Western countries showing muted growth figures and the uncertainty caused by the debt crisis still troubling the market, Asia continues its steep rise. While China's importance to the world economy is a known fact, it is not widely grasped how much the Chinese domestic market has actually grown during the past decade – and still its major growth is only expected to occur later. The world's largest population base of over 1.3 billion people creates a solid ground for such forecasts. To understand the dimensions of the growth potential, we can look at the number of middle-class consumers. Around 70 million at the early 2000s, they now number more than half a billion and, in a couple of years' time, their number is estimated to nudge above 700 million, topping the figures of Europe and US together. China is also about to overtake the West when it comes to the number of cities with over 1 million people. From 58 in 2012, their number is forecasted to attain as high as 128 in 2025. Accelerating urbanisation naturally also requires sizeable investments in infrastructure.

Equity funds investing in fast-growing emerging markets serve the needs of investors seeking high returns. Operating on the stock markets of an emerging nation, the fund's value may fluctuate significantly depending on the market situation, and the risk level is as a rule higher than that of funds investing in advanced markets. The fund is also exposed to a notable currency risk since the fund's investments in China are made in yuans and those in Hong Kong and Taiwan are made in US dollars. OP-China is, therefore, a prime choice for a return-oriented investor believing in China's growth. This fund is mainly recommended to an investor who intends to redeem his/her units after nine years at the earliest.

The portfolio underperformed the benchmark during the month as stock selection in in IT, industrials and healthcare, as well as being overweight IT detracted. This was partially offset by stock selection in consumer discretionary. In terms of style February saw a significant shift in investor appetite leading to major moves in sectors mainly on declines in bond prices (spike in yield) as investors sold out of faster growing, more momentum driven sectors (core portfolio holdings) and switched in to more cyclically sensitive areas where the portfolio has much less in the way of exposure. Stock selection in IT was a leading detractor, as holdings in Montage Technology, Luxshare Precision, Shanghai Baosight and Kingdee Intl Software all fell more than 10% on no particular news. This effect was also seen across sectors in companies either providing materials for the EV sector; Yunnan Energy New Material, or EV producers themselves; XPeng Inc., giving back some of their recent gains. Again this was on no material news flow and seems more a reflection of the shift in investor sentiment. Individual stocks within materials were, however, a beneficiary of this shift in sentiment with Wanhua Chemical Group and China Molybdenum contributing to the portfolio’s returns on expectations of a significant pick-up in global growth and increased demand for chemicals and other basic materials.

Stock selection in consumer discretionary contributed, as BYD; heavy EV exposure, which the portfolio does not own along with other EV names not owned, particularly NIO Inc. fell back. The portfolio’s holding in Huazhu Group Limited also contributed as the stock rose on expectations of increased demand for lodging as the economy returns to normality with China accelerating its vaccine roll-out The portfolio continues to look for higher quality businesses in sectors where structural growth opportunities are seen, namely: technology and automation, healthcare and consumption and will likely remain underweight in sectors where there is greater government involvement.

OP-China (Fund) is an equity fund which mainly invests its assets in the Chinese, Hong Kong and Taiwanese equity markets. Its investments are mainly made in local currencies, which is why the Fund involves a major currency risk.

The Fund mainly invests directly in equities. In its investment operations, the Fund may use derivative instruments in order to hedge against the risk of adverse market and currency movements, to replace direct investments and to promote otherwise effective portfolio management.

The Fund’s equity market exposure may vary between 75% and 100% of the Fund’s value. The equity exposure typically varies between 90% and 100%.

The Fund invests broadly across various companies. The Fund typically invests in equities of about 40–60 companies but this number may vary depending on the investment manager’s view.

The Fund’s benchmark index is MSCI China 10/40 TR. With active investing, the Fund seeks to outperform its benchmark index in the long term. The Fund mainly takes high active risk and may differ very significantly from the composition, weights and risk level of the benchmark index.

Read more about fund’s responsibility on the fund’s Finnish pages.
More details Basic data, performance and fact figures

Basic data

Fund manager
JPMorgan Asset Management
Benchmark index
MSCI China 10/40
Start date
10.06.2002
ISIN
FI0008805965
fund serie
Accumulation unit
Fund size
328 Meur
Serie value (20.04.)
667,50 EUR
Monthly review
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Rules
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Brochure
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Accumulated profit (19.04)

1mth 3mth 6mth 1 y 3 y p.a. 5 y p.a.
OP-China A +0,58 % −7,32 % +12,96 % +53,02 % +22,17 % +19,86 %
Benchmark −2,94 % −6,38 % +9,53 % +28,80 % +9,65 % +13,77 %

Yearly performance

2016 2017 2018 2019 2020 YTD
OP-China A −8,71 % +37,05 % −22,69 % +43,61 % +58,12 % +1,32 %
Benchmark +3,43 % +31,17 % −14,13 % +24,43 % +19,95 % +2,61 %

Key figures

Volatility 12 m vola 12m Sharpe 12 m Duration
OP-China A 24,96 % 2,15 -
Benchmark index - - -

Owner-customer benefits as of 1 January 2021

  • Book-entry account and custody €0: Custody of Finnish and foreign shares and ETFs without monthly charges. 
  • Buy and sell fund units €0: Buy, sell and switch nearly all of our funds without costs and earn OP bonuses by investing in mutual funds.*
  • Discount on share trading: Brokerage fee 0.17% (at least €7), maximum trading fee for Finnish shares and ETF products 1% until August 2021.
  • New benefit: Equity analyses €0: Free equity and market analysis.
  • Benefits of saving through insurance: Take out an insurance policy, switch between investment instruments and transfer funds free of charge. Earn OP bonuses from unit-linked insurance assets.

*No OP bonuses will accrue from the R2 Crystal Fund nor from institutional series of funds.

OP bonuses

In addition to OP bonuses earned through saving and investment, owner-customer earn bonuses from

  • loans
  • funds in accounts
  • purchases you have paid with the OP-Visa credit
  • insurance premiums for home, family and motor vehicle policies.

From 1 November 2020, OP bonuses will accrue from:

  • home loans, secured bank loans, student loans
  • savings and investment accounts
  • mutual fund units and unit-linked insurance
  • non-life insurance bills

The change on 1 November 2020 means that no OP bonuses will accrue from:

  • deposits in current accounts
  • unsecured consumer loans (Flexible Consumer Credit, Special Consumer Credit, One-off Credit and Overdraft Facility)
  • OP hire purchase
  • Purchases paid using OP Visa as a credit card, the balance of credit with interest of OP-Visa and OP-Mastercard cards

OP bonuses are used for the bank’s service charges and insurance premiums.

 

OP Fund Management Company Ltd manages OP mutual funds.