HSBC China Multi-Asset Income Fund Important Information • The Fund invests mainly in China related equities, fixed income instruments and other related investments. • The Fund is subject to the concentration and emerging market risks of investing primarily in a single emerging market. • RMB is not freely convertible and is subject to exchange control. There is no guarantee that RMB will not depreciate. The Fund may invest in securities that are denominated and/or settled in other currencies (other than RMB and HKD). Movement in the relevant exchange rates may adversely affect the Fund’s performance. • The Fund is subject to liquidity risk as there may not have active secondary market for its investment, including but not limited to RMB bonds. • Investments of the Fund may include investment grade, non-investment grade and unrated bonds. Generally, non-investment grade and unrated bonds may subject to higher risk. • The Fund is subject to the credit risk of the issuers of the China A-Shares Access Products held by the Fund. When the issuer of an investment defaults, the Fund may suffer a loss amounting to the value of such investment. The Fund may have up to 30% of its assets invested in China A-Shares Access Products. • There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations. • The Fund may invest in other collective investment schemes, including but not limited to RQFII (RMB Qualified Foreign Institutional Investors) funds. RQFII funds are subject to risks inherent in onshore Chinese securities markets and are subject to the relevant laws and regulations in China. • For certain classes of the Fund, the Fund may pay dividends out of capital or pay dividends gross of expenses. Investors should note that the payment of dividends out of capital or effectively out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to the original investment. Such distributions may result in an immediate decrease in the net asset value of the Fund. • The Fund’s investments may involve substantial credit/counterparty, downgrading, market, currency, volatility, liquidity, regulatory and political risks. Investors may suffer substantial loss of their investments in the Fund. • Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Fund solely based on the information provided in this document and should read the offering document of the Fund for details. This document does not constitute an offering document.
Transcript
Nov
201
4_C
MA
I_H
SB
C
Outlook & fund strategy We expect mild growth in China in 2014 (GDP 7.2% - 7.5%) and the
government to maintain bottom-line growth to support structural reforms and an economic transition
Monetary policy is expected to remain neutral and fine-tuned to balance the transition of the economy, protect the economy from systemic risks and ensure bottom-line growth is achieved. Liquidity is likely to remain under control with manageable volatility
The initial indicative portfolio is expected to be balanced, with around half of its assets in equities (including but not limited to H-Shares and China A-Shares Access Products) as valuations are attractive with upside potential and the other half in fixed income to provide income and keep volatility in check
The Fund may directly access China A-share through the Shanghai-Hong Kong Stock Connect. (up to 10% of the net asset value of the Fund)*
Indicative portfolio▲
Investment objectiveThe Fund aims to provide income and moderate capital growth, through an active asset allocation in a diversified portfolio of a minimum of 70% of its Net Asset Value in fixed income and equity securities as well as money market and cash instruments that are related to China.
* The Fund is not obliged to invest through the Shanghai-Hong Kong Stock Connect, and may not able to participate in such programme. ▲ Indicative portfolio is for illustration purpose only and the actual universe and allocation may differ. ^ Subject to on-going review by The Hongkong and Shanghai Banking Corporation Limited.
Investment involves risk. Please refer to the offering document for further details including the risk factors. The document has not been reviewed by the Securities and Futures Commission.
The document is prepared for general information purposes only. All views expressed cannot be construed as an offer or recommendation by HSBC Global Asset Management (Hong Kong) Limited (“AMHK”). AMHK and HSBC Group shall not be held liable for damages arising out of any person's reliance upon this information. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment.
Issued by HSBC Global Asset Management (Hong Kong) Limited on 21 November 2014 www.assetmanagement.hsbc.com/hk
Suitable investors Investors who have a medium to long-term investment horizon and
seek exposure to Chinese assets including equities and fixed income
Potential risks Investment risk: the Fund is an investment fund. There is no
guarantee of the repayment of principal and your investment in the Fund may suffer losses
Single market risk: the Fund invests mainly in the PRC markets which involve higher concentration risks, and greater political, economic, foreign exchange, legal and regulatory risk
China A-Shares Access Products (“CAAPs”): investment in CAAPs can be illiquid as there is no active market in CAAPs. The Fund relies upon the counterparty issuing the CAAPs to quote a price to unwind any part of the CAAPs to meet realisation requests
Foreign exchange risk: the Fund’s assets and liabilities may be denominated in currencies (such as RMB and USD) different from its base currency (HKD), it may be affected unfavourably by exchange control regulations or changes in the exchange rates between the Fund’s base currency and other currencies
Equity risk: if the market value of equity securities in which the Fund invests goes down, its Net Asset Value may be adversely affected, and investors may suffer substantial losses
Credit risk: investment in the fixed income securities is subject to the credit and counterparty risk of the issuers which may be unable or unwilling to make timely payments on principal and/or interest
Interest-rate risk: bonds are more susceptible to fluctuation in interest rates movement
RMB currency risk: the Fund may invest in RMB denominated investments, investors may be adversely affected by movements of the exchange rates between RMB and other currencies
Chinese offshore RMB bond 22.1%
Chinese offshore USDbond 27.9%
Fund details
Chinese equity 50.0%
Initial offer period
Launch date
Share class
Base currency
Currency
Minimum investment
Initial offer price
Management fee
Switching fee
Dealing
Dividend policy#
Lead fund manager
Underlying managers
Investment advisor
HSBC fund code
HSBC risk level^
10 November 2014 – 21 November 2014
21 November 2014
Class AM-HKD / AM-USD / AM-RMB
HKD
HKD / USD / RMB
HKD10,000 / USD1,000 / RMB10,000
HKD10.554 / USD10.554 / RMB10.554(includes a sales charge of 5.25% of the initial offer price)
# Dividend is not guaranteed and may be paid out of capital which will result in capital erosion and reduction in net asset value. Any change to such a dividend policy is subject to the SFC’s approval and prior investor notification. Composition of the latest dividend is available from HSBC Global Asset Management on request and also on website.
RQFII fund risk: the Fund may invest in other collective investment schemes including but not limited to RQFII funds which are subject to risks inherent in onshore Chinese securities markets
PRC tax risk: There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations
Capture opportunities in China
State-owned enterprise reforms could drive a re-rating in Chinese equities
The main goal of state-owned enterprise (SOE) reforms is to enhance operating efficiency of SOEs by opening the door to private capital into industries traditionally dominated by SOEs
Through various initiatives such as diversifying ownership and breaking SOE monopolies, reforms may help unlock SOEs’ potential profitability and alleviate overcapacity
The valuation of Chinese equities, as measured by price-to-book ratio, is cheap compared to history, and approximately at levels last seen in 2008. An improvement in company profitability could cause a re-rating of China stocks in the future
Yields on Chinese assets at attractive levels
Diversification benefits with multi-asset approach
The low correlation among major asset classes allow for greater diversification benefits
Multi-asset approach can capture opportunities in different phases of the economic cycle
Depressed yields on core government bonds and low interest rates mean investors probably cannot rely on traditional fixed income or cash assets to deliver attractive income
The Fund targets to generate an attractive potential stream of dividends by investing in Chinese securities that yield income
1
3
2
Why invest?
Current state/private participation by sector: huge potential for private capital injection1
Source: 1. HSBC Global Research, as at April 2014. Only the sectors with highest state-owned capital are shown. For illustrative purposes only and does not constitute any investment recommendation in the above-mentioned sectors. Past performance is not indicative of future performance. 2. Datastream, Bloomberg, as of 30 September 2014. Offshore RMB bond: HSBC Offshore RMB Bond Index; Offshore USD bond: JACI China Total Return Index. 3. Bloomberg, data series since December 1990 or since availability to 30 June 2014. Proxy indices: Hang Seng China Enterprises Index, Shanghai Stock Exchange Composite Index, JACI China Total Return Index, HSBC Offshore RMB Bond Index, MSCI ACWI Index, S&P 500 Index, and Barclays Global Aggregate Total Return Index. 4. HSBC Global Asset Management. Data as of August 2014.
0% 3% 3% 7%13 % 13 %
20 % 23 % 26 % 28 % 30 %36 %
53 %63 %
0%
20%
40%
60%
80%
100%
Bankin
g & se
curit
ies
Railway
Tran
spor
t
Telec
om an
d TV
Oil and
Gas
Wate
r Con
serva
ncy
Highway
Tran
spor
t
Softw
are &
IT
Utility
Man
agem
ent
Educa
tion
Health
Care
Power
, Gas
& W
ater
Enviro
n. M
gmt.
Terti
ary In
dustr
y
All FAIs
State-owned capitalPrivate capital: % share of China’s FAI (2013)
Yields on Chinese assets2
Dividend yield/yield-to-maturity
MSCI China (offshore Chinese equity) 3.41%
MSCI China A (onshore Chinese equity) 2.24%
Offshore RMB bond 4.24%
Offshore USD bond 5.50%
Correlation between major assets3
Leverage our China investment capability
HSBC Global Asset Management is a leading Chinese asset manager. We have a long track record in Chinese markets and are pioneers in innovative products
We have on-the-ground and experienced experts in both onshore and offshore capital markets, for in-depth stock and credit selection
4
Chinese fixed income investment networkFixed Income CIO, Asia Pacific(Industry experience: 27 years)
Chinese equity investment networkHead of Chinese Equities
(Industry experience: 18 years)
Hong Kong multi-asset teamHSBC China Multi-Asset IncomeCIO, Hong Kong, Multi Asset and Wealth
(Industry experience: 32 years)
Hong Kong & Shanghai fixed income team4 Hong Kong & Shanghai equity team4
Average years of industry experienceHong Kong team 16Shanghai team 8
Average years of industry experienceHong Kong team 12Shanghai team 6
China offshore Offshore Global H-shares A-shares USD bond RMB bond equity US equity
A-shares 0.25
China offshore USD bond 0.62 0.39
Offshore RMB bond 0.41 0.46 0.33
Global equity 0.44 0.14 0.63 0.40
US equity 0.41 0.09 0.56 0.32 0.92
Global bond 0.18 0.09 0.50 0.21 0.28 0.18
HSBC China Multi-Asset Income Fund
Important Information • The Fund invests mainly in China related equities, fixed income instruments and other related investments.• The Fund is subject to the concentration and emerging market risks of investing primarily in a single emerging market.• RMB is not freely convertible and is subject to exchange control. There is no guarantee that RMB will not depreciate. The Fund may invest in
securities that are denominated and/or settled in other currencies (other than RMB and HKD). Movement in the relevant exchange rates may adversely affect the Fund’s performance.
• The Fund is subject to liquidity risk as there may not have active secondary market for its investment, including but not limited to RMB bonds. • Investments of the Fund may include investment grade, non-investment grade and unrated bonds. Generally, non-investment grade and unrated
bonds may subject to higher risk. • The Fund is subject to the credit risk of the issuers of the China A-Shares Access Products held by the Fund. When the issuer of an investment
defaults, the Fund may suffer a loss amounting to the value of such investment. The Fund may have up to 30% of its assets invested in China A-Shares Access Products.
• There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations.
• The Fund may invest in other collective investment schemes, including but not limited to RQFII (RMB Qualified Foreign Institutional Investors) funds. RQFII funds are subject to risks inherent in onshore Chinese securities markets and are subject to the relevant laws and regulations in China.
• For certain classes of the Fund, the Fund may pay dividends out of capital or pay dividends gross of expenses. Investors should note that the payment of dividends out of capital or effectively out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to the original investment. Such distributions may result in an immediate decrease in the net asset value of the Fund.
• The Fund’s investments may involve substantial credit/counterparty, downgrading, market, currency, volatility, liquidity, regulatory and political risks. Investors may suffer substantial loss of their investments in the Fund.
• Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Fund solely based on the information provided in this document and should read the offering document of the Fund for details. This document does not constitute an offering document.
Product Key Facts Explanatory Memorandum
Nov
201
4_C
MA
I_H
SB
C
Outlook & fund strategy We expect mild growth in China in 2014 (GDP 7.2% - 7.5%) and the
government to maintain bottom-line growth to support structural reforms and an economic transition
Monetary policy is expected to remain neutral and fine-tuned to balance the transition of the economy, protect the economy from systemic risks and ensure bottom-line growth is achieved. Liquidity is likely to remain under control with manageable volatility
The initial indicative portfolio is expected to be balanced, with around half of its assets in equities (including but not limited to H-Shares and China A-Shares Access Products) as valuations are attractive with upside potential and the other half in fixed income to provide income and keep volatility in check
The Fund may directly access China A-share through the Shanghai-Hong Kong Stock Connect. (up to 10% of the net asset value of the Fund)*
Indicative portfolio▲
Investment objectiveThe Fund aims to provide income and moderate capital growth, through an active asset allocation in a diversified portfolio of a minimum of 70% of its Net Asset Value in fixed income and equity securities as well as money market and cash instruments that are related to China.
* The Fund is not obliged to invest through the Shanghai-Hong Kong Stock Connect, and may not able to participate in such programme. ▲ Indicative portfolio is for illustration purpose only and the actual universe and allocation may differ. ^ Subject to on-going review by The Hongkong and Shanghai Banking Corporation Limited.
Investment involves risk. Please refer to the offering document for further details including the risk factors. The document has not been reviewed by the Securities and Futures Commission.
The document is prepared for general information purposes only. All views expressed cannot be construed as an offer or recommendation by HSBC Global Asset Management (Hong Kong) Limited (“AMHK”). AMHK and HSBC Group shall not be held liable for damages arising out of any person's reliance upon this information. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment.
Issued by HSBC Global Asset Management (Hong Kong) Limited on 21 November 2014 www.assetmanagement.hsbc.com/hk
Suitable investors Investors who have a medium to long-term investment horizon and
seek exposure to Chinese assets including equities and fixed income
Potential risks Investment risk: the Fund is an investment fund. There is no
guarantee of the repayment of principal and your investment in the Fund may suffer losses
Single market risk: the Fund invests mainly in the PRC markets which involve higher concentration risks, and greater political, economic, foreign exchange, legal and regulatory risk
China A-Shares Access Products (“CAAPs”): investment in CAAPs can be illiquid as there is no active market in CAAPs. The Fund relies upon the counterparty issuing the CAAPs to quote a price to unwind any part of the CAAPs to meet realisation requests
Foreign exchange risk: the Fund’s assets and liabilities may be denominated in currencies (such as RMB and USD) different from its base currency (HKD), it may be affected unfavourably by exchange control regulations or changes in the exchange rates between the Fund’s base currency and other currencies
Equity risk: if the market value of equity securities in which the Fund invests goes down, its Net Asset Value may be adversely affected, and investors may suffer substantial losses
Credit risk: investment in the fixed income securities is subject to the credit and counterparty risk of the issuers which may be unable or unwilling to make timely payments on principal and/or interest
Interest-rate risk: bonds are more susceptible to fluctuation in interest rates movement
RMB currency risk: the Fund may invest in RMB denominated investments, investors may be adversely affected by movements of the exchange rates between RMB and other currencies
Chinese offshore RMB bond 22.1%
Chinese offshore USDbond 27.9%
Fund details
Chinese equity 50.0%
Initial offer period
Launch date
Share class
Base currency
Currency
Minimum investment
Initial offer price
Management fee
Switching fee
Dealing
Dividend policy#
Lead fund manager
Underlying managers
Investment advisor
HSBC fund code
HSBC risk level^
10 November 2014 – 21 November 2014
21 November 2014
Class AM-HKD / AM-USD / AM-RMB
HKD
HKD / USD / RMB
HKD10,000 / USD1,000 / RMB10,000
HKD10.554 / USD10.554 / RMB10.554(includes a sales charge of 5.25% of the initial offer price)
# Dividend is not guaranteed and may be paid out of capital which will result in capital erosion and reduction in net asset value. Any change to such a dividend policy is subject to the SFC’s approval and prior investor notification. Composition of the latest dividend is available from HSBC Global Asset Management on request and also on website.
RQFII fund risk: the Fund may invest in other collective investment schemes including but not limited to RQFII funds which are subject to risks inherent in onshore Chinese securities markets
PRC tax risk: There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations
Capture opportunities in China
State-owned enterprise reforms could drive a re-rating in Chinese equities
The main goal of state-owned enterprise (SOE) reforms is to enhance operating efficiency of SOEs by opening the door to private capital into industries traditionally dominated by SOEs
Through various initiatives such as diversifying ownership and breaking SOE monopolies, reforms may help unlock SOEs’ potential profitability and alleviate overcapacity
The valuation of Chinese equities, as measured by price-to-book ratio, is cheap compared to history, and approximately at levels last seen in 2008. An improvement in company profitability could cause a re-rating of China stocks in the future
Yields on Chinese assets at attractive levels
Diversification benefits with multi-asset approach
The low correlation among major asset classes allow for greater diversification benefits
Multi-asset approach can capture opportunities in different phases of the economic cycle
Depressed yields on core government bonds and low interest rates mean investors probably cannot rely on traditional fixed income or cash assets to deliver attractive income
The Fund targets to generate an attractive potential stream of dividends by investing in Chinese securities that yield income
1
3
2
Why invest?
Current state/private participation by sector: huge potential for private capital injection1
Source: 1. HSBC Global Research, as at April 2014. Only the sectors with highest state-owned capital are shown. For illustrative purposes only and does not constitute any investment recommendation in the above-mentioned sectors. Past performance is not indicative of future performance. 2. Datastream, Bloomberg, as of 30 September 2014. Offshore RMB bond: HSBC Offshore RMB Bond Index; Offshore USD bond: JACI China Total Return Index. 3. Bloomberg, data series since December 1990 or since availability to 30 June 2014. Proxy indices: Hang Seng China Enterprises Index, Shanghai Stock Exchange Composite Index, JACI China Total Return Index, HSBC Offshore RMB Bond Index, MSCI ACWI Index, S&P 500 Index, and Barclays Global Aggregate Total Return Index. 4. HSBC Global Asset Management. Data as of August 2014.
0% 3% 3% 7%13 % 13 %
20 % 23 % 26 % 28 % 30 %36 %
53 %63 %
0%
20%
40%
60%
80%
100%
Bankin
g & se
curit
ies
Railway
Tran
spor
t
Telec
om an
d TV
Oil and
Gas
Wate
r Con
serva
ncy
Highway
Tran
spor
t
Softw
are &
IT
Utility
Man
agem
ent
Educa
tion
Health
Care
Power
, Gas
& W
ater
Enviro
n. M
gmt.
Terti
ary In
dustr
y
All FAIs
State-owned capitalPrivate capital: % share of China’s FAI (2013)
Yields on Chinese assets2
Dividend yield/yield-to-maturity
MSCI China (offshore Chinese equity) 3.41%
MSCI China A (onshore Chinese equity) 2.24%
Offshore RMB bond 4.24%
Offshore USD bond 5.50%
Correlation between major assets3
Leverage our China investment capability
HSBC Global Asset Management is a leading Chinese asset manager. We have a long track record in Chinese markets and are pioneers in innovative products
We have on-the-ground and experienced experts in both onshore and offshore capital markets, for in-depth stock and credit selection
4
Chinese fixed income investment networkFixed Income CIO, Asia Pacific(Industry experience: 27 years)
Chinese equity investment networkHead of Chinese Equities
(Industry experience: 18 years)
Hong Kong multi-asset teamHSBC China Multi-Asset IncomeCIO, Hong Kong, Multi Asset and Wealth
(Industry experience: 32 years)
Hong Kong & Shanghai fixed income team4 Hong Kong & Shanghai equity team4
Average years of industry experienceHong Kong team 16Shanghai team 8
Average years of industry experienceHong Kong team 12Shanghai team 6
China offshore Offshore Global H-shares A-shares USD bond RMB bond equity US equity
A-shares 0.25
China offshore USD bond 0.62 0.39
Offshore RMB bond 0.41 0.46 0.33
Global equity 0.44 0.14 0.63 0.40
US equity 0.41 0.09 0.56 0.32 0.92
Global bond 0.18 0.09 0.50 0.21 0.28 0.18
HSBC China Multi-Asset Income Fund
Important Information • The Fund invests mainly in China related equities, fixed income instruments and other related investments.• The Fund is subject to the concentration and emerging market risks of investing primarily in a single emerging market.• RMB is not freely convertible and is subject to exchange control. There is no guarantee that RMB will not depreciate. The Fund may invest in
securities that are denominated and/or settled in other currencies (other than RMB and HKD). Movement in the relevant exchange rates may adversely affect the Fund’s performance.
• The Fund is subject to liquidity risk as there may not have active secondary market for its investment, including but not limited to RMB bonds. • Investments of the Fund may include investment grade, non-investment grade and unrated bonds. Generally, non-investment grade and unrated
bonds may subject to higher risk. • The Fund is subject to the credit risk of the issuers of the China A-Shares Access Products held by the Fund. When the issuer of an investment
defaults, the Fund may suffer a loss amounting to the value of such investment. The Fund may have up to 30% of its assets invested in China A-Shares Access Products.
• There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations.
• The Fund may invest in other collective investment schemes, including but not limited to RQFII (RMB Qualified Foreign Institutional Investors) funds. RQFII funds are subject to risks inherent in onshore Chinese securities markets and are subject to the relevant laws and regulations in China.
• For certain classes of the Fund, the Fund may pay dividends out of capital or pay dividends gross of expenses. Investors should note that the payment of dividends out of capital or effectively out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to the original investment. Such distributions may result in an immediate decrease in the net asset value of the Fund.
• The Fund’s investments may involve substantial credit/counterparty, downgrading, market, currency, volatility, liquidity, regulatory and political risks. Investors may suffer substantial loss of their investments in the Fund.
• Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Fund solely based on the information provided in this document and should read the offering document of the Fund for details. This document does not constitute an offering document.
Product Key Facts Explanatory Memorandum
Nov
201
4_C
MA
I_H
SB
C
Outlook & fund strategy We expect mild growth in China in 2014 (GDP 7.2% - 7.5%) and the
government to maintain bottom-line growth to support structural reforms and an economic transition
Monetary policy is expected to remain neutral and fine-tuned to balance the transition of the economy, protect the economy from systemic risks and ensure bottom-line growth is achieved. Liquidity is likely to remain under control with manageable volatility
The initial indicative portfolio is expected to be balanced, with around half of its assets in equities (including but not limited to H-Shares and China A-Shares Access Products) as valuations are attractive with upside potential and the other half in fixed income to provide income and keep volatility in check
The Fund may directly access China A-share through the Shanghai-Hong Kong Stock Connect. (up to 10% of the net asset value of the Fund)*
Indicative portfolio▲
Investment objectiveThe Fund aims to provide income and moderate capital growth, through an active asset allocation in a diversified portfolio of a minimum of 70% of its Net Asset Value in fixed income and equity securities as well as money market and cash instruments that are related to China.
* The Fund is not obliged to invest through the Shanghai-Hong Kong Stock Connect, and may not able to participate in such programme. ▲ Indicative portfolio is for illustration purpose only and the actual universe and allocation may differ. ^ Subject to on-going review by The Hongkong and Shanghai Banking Corporation Limited.
Investment involves risk. Please refer to the offering document for further details including the risk factors. The document has not been reviewed by the Securities and Futures Commission.
The document is prepared for general information purposes only. All views expressed cannot be construed as an offer or recommendation by HSBC Global Asset Management (Hong Kong) Limited (“AMHK”). AMHK and HSBC Group shall not be held liable for damages arising out of any person's reliance upon this information. Any person considering an investment should seek independent advice on the suitability or otherwise of the particular investment.
Issued by HSBC Global Asset Management (Hong Kong) Limited on 21 November 2014 www.assetmanagement.hsbc.com/hk
Suitable investors Investors who have a medium to long-term investment horizon and
seek exposure to Chinese assets including equities and fixed income
Potential risks Investment risk: the Fund is an investment fund. There is no
guarantee of the repayment of principal and your investment in the Fund may suffer losses
Single market risk: the Fund invests mainly in the PRC markets which involve higher concentration risks, and greater political, economic, foreign exchange, legal and regulatory risk
China A-Shares Access Products (“CAAPs”): investment in CAAPs can be illiquid as there is no active market in CAAPs. The Fund relies upon the counterparty issuing the CAAPs to quote a price to unwind any part of the CAAPs to meet realisation requests
Foreign exchange risk: the Fund’s assets and liabilities may be denominated in currencies (such as RMB and USD) different from its base currency (HKD), it may be affected unfavourably by exchange control regulations or changes in the exchange rates between the Fund’s base currency and other currencies
Equity risk: if the market value of equity securities in which the Fund invests goes down, its Net Asset Value may be adversely affected, and investors may suffer substantial losses
Credit risk: investment in the fixed income securities is subject to the credit and counterparty risk of the issuers which may be unable or unwilling to make timely payments on principal and/or interest
Interest-rate risk: bonds are more susceptible to fluctuation in interest rates movement
RMB currency risk: the Fund may invest in RMB denominated investments, investors may be adversely affected by movements of the exchange rates between RMB and other currencies
Chinese offshore RMB bond 22.1%
Chinese offshore USDbond 27.9%
Fund details
Chinese equity 50.0%
Initial offer period
Launch date
Share class
Base currency
Currency
Minimum investment
Initial offer price
Management fee
Switching fee
Dealing
Dividend policy#
Lead fund manager
Underlying managers
Investment advisor
HSBC fund code
HSBC risk level^
10 November 2014 – 21 November 2014
21 November 2014
Class AM-HKD / AM-USD / AM-RMB
HKD
HKD / USD / RMB
HKD10,000 / USD1,000 / RMB10,000
HKD10.554 / USD10.554 / RMB10.554(includes a sales charge of 5.25% of the initial offer price)
# Dividend is not guaranteed and may be paid out of capital which will result in capital erosion and reduction in net asset value. Any change to such a dividend policy is subject to the SFC’s approval and prior investor notification. Composition of the latest dividend is available from HSBC Global Asset Management on request and also on website.
RQFII fund risk: the Fund may invest in other collective investment schemes including but not limited to RQFII funds which are subject to risks inherent in onshore Chinese securities markets
PRC tax risk: There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations
Capture opportunities in China
State-owned enterprise reforms could drive a re-rating in Chinese equities
The main goal of state-owned enterprise (SOE) reforms is to enhance operating efficiency of SOEs by opening the door to private capital into industries traditionally dominated by SOEs
Through various initiatives such as diversifying ownership and breaking SOE monopolies, reforms may help unlock SOEs’ potential profitability and alleviate overcapacity
The valuation of Chinese equities, as measured by price-to-book ratio, is cheap compared to history, and approximately at levels last seen in 2008. An improvement in company profitability could cause a re-rating of China stocks in the future
Yields on Chinese assets at attractive levels
Diversification benefits with multi-asset approach
The low correlation among major asset classes allow for greater diversification benefits
Multi-asset approach can capture opportunities in different phases of the economic cycle
Depressed yields on core government bonds and low interest rates mean investors probably cannot rely on traditional fixed income or cash assets to deliver attractive income
The Fund targets to generate an attractive potential stream of dividends by investing in Chinese securities that yield income
1
3
2
Why invest?
Current state/private participation by sector: huge potential for private capital injection1
Source: 1. HSBC Global Research, as at April 2014. Only the sectors with highest state-owned capital are shown. For illustrative purposes only and does not constitute any investment recommendation in the above-mentioned sectors. Past performance is not indicative of future performance. 2. Datastream, Bloomberg, as of 30 September 2014. Offshore RMB bond: HSBC Offshore RMB Bond Index; Offshore USD bond: JACI China Total Return Index. 3. Bloomberg, data series since December 1990 or since availability to 30 June 2014. Proxy indices: Hang Seng China Enterprises Index, Shanghai Stock Exchange Composite Index, JACI China Total Return Index, HSBC Offshore RMB Bond Index, MSCI ACWI Index, S&P 500 Index, and Barclays Global Aggregate Total Return Index. 4. HSBC Global Asset Management. Data as of August 2014.
0% 3% 3% 7%13 % 13 %
20 % 23 % 26 % 28 % 30 %36 %
53 %63 %
0%
20%
40%
60%
80%
100%
Bankin
g & se
curit
ies
Railway
Tran
spor
t
Telec
om an
d TV
Oil and
Gas
Wate
r Con
serva
ncy
Highway
Tran
spor
t
Softw
are &
IT
Utility
Man
agem
ent
Educa
tion
Health
Care
Power
, Gas
& W
ater
Enviro
n. M
gmt.
Terti
ary In
dustr
y
All FAIs
State-owned capitalPrivate capital: % share of China’s FAI (2013)
Yields on Chinese assets2
Dividend yield/yield-to-maturity
MSCI China (offshore Chinese equity) 3.41%
MSCI China A (onshore Chinese equity) 2.24%
Offshore RMB bond 4.24%
Offshore USD bond 5.50%
Correlation between major assets3
Leverage our China investment capability
HSBC Global Asset Management is a leading Chinese asset manager. We have a long track record in Chinese markets and are pioneers in innovative products
We have on-the-ground and experienced experts in both onshore and offshore capital markets, for in-depth stock and credit selection
4
Chinese fixed income investment networkFixed Income CIO, Asia Pacific(Industry experience: 27 years)
Chinese equity investment networkHead of Chinese Equities
(Industry experience: 18 years)
Hong Kong multi-asset teamHSBC China Multi-Asset IncomeCIO, Hong Kong, Multi Asset and Wealth
(Industry experience: 32 years)
Hong Kong & Shanghai fixed income team4 Hong Kong & Shanghai equity team4
Average years of industry experienceHong Kong team 16Shanghai team 8
Average years of industry experienceHong Kong team 12Shanghai team 6
China offshore Offshore Global H-shares A-shares USD bond RMB bond equity US equity
A-shares 0.25
China offshore USD bond 0.62 0.39
Offshore RMB bond 0.41 0.46 0.33
Global equity 0.44 0.14 0.63 0.40
US equity 0.41 0.09 0.56 0.32 0.92
Global bond 0.18 0.09 0.50 0.21 0.28 0.18
HSBC China Multi-Asset Income Fund
Important Information • The Fund invests mainly in China related equities, fixed income instruments and other related investments.• The Fund is subject to the concentration and emerging market risks of investing primarily in a single emerging market.• RMB is not freely convertible and is subject to exchange control. There is no guarantee that RMB will not depreciate. The Fund may invest in
securities that are denominated and/or settled in other currencies (other than RMB and HKD). Movement in the relevant exchange rates may adversely affect the Fund’s performance.
• The Fund is subject to liquidity risk as there may not have active secondary market for its investment, including but not limited to RMB bonds. • Investments of the Fund may include investment grade, non-investment grade and unrated bonds. Generally, non-investment grade and unrated
bonds may subject to higher risk. • The Fund is subject to the credit risk of the issuers of the China A-Shares Access Products held by the Fund. When the issuer of an investment
defaults, the Fund may suffer a loss amounting to the value of such investment. The Fund may have up to 30% of its assets invested in China A-Shares Access Products.
• There are risks and uncertainties associated with China’s tax rules and practices. In relation to the Fund’s investment in A-shares through Shanghai-Hong Kong Stock Connect and China A-Shares Access Products (where applicable), the Fund will not withhold (or will not request the issuer of the relevant investments to withhold) any amount of realised or unrealised gains on its investments in A-shares and China A-Shares Access Products. The Manager may at its discretion make further modification to the tax provision policy of the Fund based on new developments and interpretation of the relevant regulations.
• The Fund may invest in other collective investment schemes, including but not limited to RQFII (RMB Qualified Foreign Institutional Investors) funds. RQFII funds are subject to risks inherent in onshore Chinese securities markets and are subject to the relevant laws and regulations in China.
• For certain classes of the Fund, the Fund may pay dividends out of capital or pay dividends gross of expenses. Investors should note that the payment of dividends out of capital or effectively out of capital represents a return or withdrawal of part of the amount they originally invested or from any capital gains attributable to the original investment. Such distributions may result in an immediate decrease in the net asset value of the Fund.
• The Fund’s investments may involve substantial credit/counterparty, downgrading, market, currency, volatility, liquidity, regulatory and political risks. Investors may suffer substantial loss of their investments in the Fund.
• Unit trusts are NOT equivalent to time deposits. Investors should not invest in the Fund solely based on the information provided in this document and should read the offering document of the Fund for details. This document does not constitute an offering document.
