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2019Semi-Annual Report

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2019Semi-Annual Report VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND SEMI-ANNUAL 2019 REPORT For the six months ended 30 June 2019 Value Partners Hong Kong Limited 43rd Floor, The Center 99 Queen’s Road Central, Hong Kong Tel: (852) 2880 9263 Fax: (852) 2565 7975 Email: [email protected] Website: www.valuepartners-group.com In the event of inconsistency, the English text of this Semi-Annual Report shall prevail over the Chinese text. This report shall not constitute an offer to sell or a solicitation of an offer to buy shares in any of the funds. Subscriptions are to be made only on the basis of the information contained in the explanatory memorandum, as supplemented by the latest semi-annual and annual reports. VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) CONTENTS Pages General information 2-4 Manager’s report 5-7 Statement of financial position (unaudited) 8-9 Investment portfolio (unaudited) 10-40 Investment portfolio movements (unaudited) 41-43 Distribution to redeemable participating shareholders (unaudited) 44 SEMI-ANNUAL REPORT 2019 SEMI-ANNUAL REPORT 2019 For the six months ended 30 June 2019 For the six months ended 30 June 2019 1 VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) GENERAL INFORMATION Directors Auditor Mr. Roger Anthony Hepper PricewaterhouseCoopers Ms. Ng Chit Sze, Jessie P.O. Box 258 George Town Manager Grand Cayman, KY1-1104 Value Partners Hong Kong Limited Cayman Islands 43rd Floor, The Center 99 Queen’s Road Central Legal Advisors Hong Kong With respect to Cayman Islands law Walkers Directors of the Manager Walker House Dato’ Seri Cheah Cheng Hye 87 Mary Street, George Town Mr. So Chun Ki Louis Grand Cayman KY1-9001 Mr. Ho Man Kei, Norman Cayman Islands Administrator With respect to Hong Kong and HSBC Trustee (Cayman) Limited International law P.O. Box 309 Deacons Ugland House 5th Floor, Alexandra House Grand Cayman, KY1-1104 18 Chater Road, Central Cayman Islands Hong Kong Custodian and Administrator’s Agent Information available from: HSBC Institutional Trust Services (Asia) Limited Value Partners Hong Kong Limited 1 Queen’s Road Central 43rd Floor, The Center Hong Kong 99 Queen’s Road Central Hong Kong Registered and Principal Office P.O. Box 309 Investor hotline : (852) 2143 0688 Ugland House Fax : (852) 2565 7975 Grand Cayman, KY1-1104 Email : [email protected] Cayman Islands Website : www.valuepartners-group.com SEMI-ANNUAL REPORT 2019 SEMI-ANNUAL REPORT 2019 2 For the six months ended 30 June 2019 For the six months ended 30 June 2019 VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) GENERAL INFORMATION (Continued) Recent awards and achievements Corporate Awards 2019 • The Asset Triple A Asset Servicing, Institutional Investor and Insurance Awards 2019 Fund Manager of the Year - Fixed Income High Yield – Greater China Gordon Ip – The Asset 2018 • I&M Professional Investment Awards 2018 Cross Border Awards: CIO of the Year (Fixed Income) – Gordon Ip – Insights and Mandate • AM730, PRAsia and Roadshow ListCo Excellence Awards 2018 Value Partners Group Limited – Best Listed Company (Main Board category) – AM730, PRAsia and Roadshow • Forbes “Asia’s 200 Best Under A Billion” 2018 Value Partners Group was ranked among the top 200 leading listed companies in the Asia-Pacific with annual revenue between US$5 million and US$1 billion. – Forbes Asia • The Asset Benchmark Research Awards 2018 – Asian G3 Bonds Top Investment House in Hedge Fund category – The Asset • The Asset Benchmark Research Awards 2018 – G3 Bonds The Most Astute Investors in Asian G3 Bonds for Hong Kong – The Asset • The Asset Benchmark Research Awards 2018 – G3 Bonds The Most Astute Investors in Asian G3 Bonds for Hong Kong Gordon IP – Highly commended – The Asset • The Asset Benchmark Research Awards 2018 – G3 Bonds The Most Astute Investors in Asian G3 Bonds for Hong Kong Elaine HU – Highly commended – The Asset • Listed Company Awards of Excellence 2018 Outstanding Listed Company (Main Board category) – Hong Kong Economic Journal • Benchmark Fund of the Year Awards 2018, Hong Kong High Yield Fixed Income: Manager of the Year Mr. Gordon Ip (CIO, Fixed Income) – Benchmark • Benchmark Fund of the Year Awards 2018, Hong Kong High Yield Fixed Income House: Outstanding Achiever – Benchmark • Benchmark Fund of the Year Awards 2018, Singapore High Yield Fixed Income House: Outstanding Achiever – Benchmark • Benchmark Fund of the Year Awards 2018, Hong Kong Commodity ETF House: Best-In-Class Value Partners/Sensible Asset Management – Benchmark SEMI-ANNUAL REPORT 2019 SEMI-ANNUAL REPORT 2019 For the six months ended 30 June 2019 For the six months ended 30 June 2019 3 VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) GENERAL INFORMATION (Continued) Recent awards and achievements (Continued) Value Partners Greater China High Yield Income Fund 2019 • Lipper Fund Awards from Refinitiv Hong Kong 2019 Best US Dollar Bond Fund: High Yield (3 Years) – Refinitiv • Lipper Fund Awards from Refinitiv Hong Kong 2019 Best US Dollar Bond Fund: High Yield (5 Years) – Refinitiv • Fund Selector Asia Awards Hong Kong 2019 High Yield Fund – Platinum Winner – Fund Selector Asia 2018 • Lipper Fund Awards Hong Kong 2018 Best US Dollar Bond Fund: High Yield (3 Years) – Thomson Reuters • Lipper Fund Awards Hong Kong 2018 Best US Dollar Bond Fund: High Yield (5 Years) – Thomson Reuters • AsianInvestor – Asset Management Awards Best Retail Product – AsianInvestor • Fund Selector Asia Awards Hong Kong 2018 High Yield – Gold Winner – Fund Selector Asia • Benchmark Fund of the Year Awards 2018, Hong Kong US Dollar High Yield Fixed Income Fund: Best-in-Class – Benchmark • Offshore China Fund Awards 2018 Best Total Return – Greater China Fixed Income Fund (3 Years) – HKCAMA & Bloomberg • Offshore China Fund Awards 2018 Best Total Return – Greater China Fixed Income Fund (5 Years) – HKCAMA & Bloomberg SEMI-ANNUAL REPORT 2019 SEMI-ANNUAL REPORT 2019 4 For the six months ended 30 June 2019 For the six months ended 30 June 2019 VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) MANAGER’S REPORT At the beginning of 2019, attractive valuations, higher expectations of a positive outcome from the U.S.-China trade talks and an increasing dovish Federal Reserve all contributed to a strong start for Asian credits. The market continued its strong momentum into February and March as market participants put money to work on the back of inflows. The Federal Reserve’s statement to put interest rate hike on hold in March further fueled a strong rally for Asian credits, with risk appetite rising significantly. However, the Asian credit markets took a breather after a strong first quarter as investors turned to a wait-and-see mode in April due to the lack of clarity on U.S.-China trade talks, the Federal Reserve’s interest rate cut intension and corporates’ profitability prospects. The market sentiment deteriorated in May when the U.S.-China trade talks eventually went into stalemate with the U.S. imposing additional tariffs on Chinese goods before it went beyond trade to pursue a global ban on Chinese tech giant Huawei Technologies. Risk appetite took a deep dive and flight-to-quality sentiment drove money to safer assets such as U.S. Treasuries, the U.S. dollar and the Japanese yen. After the turbulent May, the Asian credit market bounced back to a certain extent in June. At the end of the first half, the bilateral meeting between Chinese President Xi Jinping and U.S. President Donald Trump at the G20 Osaka Summit brought some positive outcomes as the two nations agreed to a trade truce while negotiations will be carried on. During the reporting period, we continued to see inflow into fixed income as investors rotated money from equities into income-generating assets. Investors’ preference for yield is still very prominent, lending support to the overall credit market. Hence we continued to deploy a large sum of capital into the market, mostly into Greater China name, mostly in high-carry, short-tenor issues, during the first half. We saw the weakening in May and June as a good entry point to buy some of our conviction names at a cheaper valuation. On portfolio strategy, we favor Chinese property bonds as the default risks of Chinese property issuers remain low. Meanwhile, we are spending more time on China industrial bonds as their value is starting to emerge. We continue to be very active in both the primary and secondary markets, and put our money on names that provide strong income. SEMI-ANNUAL REPORT 2019 SEMI-ANNUAL REPORT 2019 For the six months ended 30 June 2019 For the six months ended 30 June 2019 5 VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND VALUE PARTNERS GREATER CHINA HIGH YIELD INCOME FUND (Incorporated as an exempted company in the Cayman Islands with limited liability) (Incorporated as an exempted company in the Cayman Islands with limited liability) MANAGER’S REPORT (Continued) Outlook: Although China and the U.S.
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