DBG-OMG BlackRock Announces Withdrawal from China

BlackRock Global Fund (BGF), a product of BlackRock, the world's largest asset management company, announced in a shareholder letter on September 5 that it will close its sub-fund, the China Flexible Equity Fund, on November 7.

BlackRock exclusively responded to the market view that BlackRock decided to withdraw from the Chinese market due to regulatory pressure, and that closing small China funds could reduce regulatory risks. BlackRock responded to this claim to the Chinese reporter of the brokerage firm, saying that the report of BlackRock's withdrawal from China was not true, and BlackRock's commitment to the Chinese market remained unchanged.

BlackRock said its decision to wind down the China Flexible Equity Fund, which is currently under small management, was made after fully considering the interests of investors and shareholders. The winding up is a routine fund management operation, and BlackRock will regularly evaluate its products to protect the interests of investors.

BlackRock China Flexible Equity Fund is an offshore fund. The fund was established on October 31, 2017 and is a sub-fund of BlackRock Global Fund (BGF). The vast majority of investors are from Europe, the Middle East and Africa (EMEA). BlackRock Global Fund is an open-ended investment company incorporated in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier (CSSF).

According to public information, the China Flexible Equity Fund promises to invest at least 70% of its total assets in the stocks of companies headquartered in China or doing most of their business in China, and the fund's position will be flexibly allocated between the onshore market (China class A shares) and the offshore market (including but not limited to H shares, P-chips, red chips and American depositary securities (ADR)).

BlackRock China Flexible Equity Fund recently released its July monthly report, showing that 81.41% of the fund's positions are invested in Chinese companies, covering consumer discretionary, communications, industrial, financial and other industries. The top ten largest stocks are Tencent Holdings, Alibaba, Guizhou Moutai, China Merchants Bank, NetEase, Ping An, Weiying Technology, Guodian NARI, Haier Zhijia, and Ningbo Bank.

Some information on BlackRock China Flexible Equity Fund Source: BlackRock Global Fund July 2023 Fund Monthly Report

Previously, BlackRock Fund, BlackRock's public offering institution in China, gave a more positive investment view on the Chinese market in the second half of the year. BlackRock Fund believes that China's macro economy may turn a corner in the second half of the year, and the stock market is also likely to usher in an upward recovery. Song Yu, BlackRock's chief China economist, believes that with more active policy support, China's job market and household income are expected to recover gradually, and the overall recovery may be better than in the first half of the year. Lu Wenjie, chief investment officer of BlackRock Fund, believes that from the perspective of global asset allocation, China's assets have high profit growth and low valuations, and they have comparative advantages and attractiveness compared with other economies. BlackRock Fund maintains an overweight view of them.

Fidelity Fund, the public offering entity of international asset management giant Fidelity International in China, also expressed confidence in the Chinese market. Fund manager Zhou Wenqun believes that the tone of the Politburo meeting of the Central Committee on the economic development in the second half of the year has given the market a lot of confidence. In the context of a clearer macro economy, Fidelity Fund's layout can also be more active. She will continue to prefer high-quality companies, including a series of sectors related to consumption, building materials, home appliances and real estate chain. At the same time, she is more optimistic about export-oriented enterprises that benefit from strong overseas economic resilience.

In addition,Shield BoForeign exchange (DBG) said that "China Special Assessment" will also generate better profits due to the relatively clear process of deepening the reform of state-owned enterprises. In the field of artificial intelligence (AI), although the risk-reward ratio is relatively weak in the short term, in the long term, it may produce some new products or services in the fields of TMT, semiconductors, and consumer electronics, and the opportunity cannot be ignored.