Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
August 2016
ManulifeAM.com
November 2014
“For professional investors / investment advisors only”
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Introduction
The China bond market has seen tremendous growth over the past decade, growing at around 15% per annum over the
past five years alone. Today, it is the third-largest bond market in the world, standing at a size of US$6.2 trillion1.
Despite this significant size, foreign investments represent less than 2% of the total market share2, which is extremely low
by international standards. This is largely due to the Chinese government’s capital controls in the past, which restricted
foreign access to only investors under Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign
Institutional Investor (RQFII) regimes.
In March this year, global markets cheered when the Chinese government further opened up its domestic bond market to
foreign investors. Today, most long term foreign institutional investors, such as central banks and sovereign wealth funds,
can directly access China’s bond market without quota or repatriation restrictions.
Liberalisation move spells tremendous opportunities for investors
We believe potential inclusion
in global bond indices,
attractive yield premium
and diversification benefits
should push global demand
for China bonds.
We believe this development lays the foundation for China bonds to potentially become a
key allocation in global investor portfolios, for several reasons.
First, the push to open up China’s capital market should pave the way for the inclusion
of onshore China bonds into global bond indices. This, in turn, is expected to trigger a
significant increase in global investor appetite for Chinese fixed income.
Second, we believe China bonds currently offer an attractive yield premium, compared to
those in other developed markets of similar credit rating. This can potentially further stoke
investor interest in the asset class.
Finally, given its low correlation to other asset classes, investing in China bonds can
potentially offer diversification benefits within a broad portfolio.
Marking over 5 years of expertise in onshore China bond strategy
Key to the expertise of
our China bond strategy
is our extensive, groundup proprietary research
capabilities.
Manulife Asset Management’s onshore China bond strategy is one of the few with more
than five years track record. It is designed to help investors navigate the fast-growing
domestic China bond market, leveraging the firm’s extensive research capabilities to
capture our best investment ideas within the asset class.
To mark the strategy’s fifth anniversary, we ask lead manager Paula Chan about the
strategy’s investment philosophy and performance, the potential benefits of the asset
class, as well as her outlook for the coming years.
1. Source: Bank for International Settlements (BIS), Asian Development Bank, European Central Bank, Bloomberg. All amounts outstanding by residence of issuer. Manulife Asset Management, 31
December 2015
2. Source: ChinaBond, January 2016
2
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Can you first share with us an overview of your investment strategy and
philosophy in China onshore bonds?
Our strategy aims to maximise total returns, through a combination of capital appreciation
and income generation, by investing primarily in renminbi fixed income securities issued in
Mainland China.
We believe a well-diversified
portfolio is achieved through
a multi-sector approach.
We adopt a multi-sector approach, investing in high-quality physical bonds issued by
government agencies, supra-nationals and corporates. This wide range helps us achieve
portfolio diversification, since no single issuer dominates overall portfolio risk.
Rigorous credit selection
helps to ensure we invest in
fundamentally sound Chinese
companies.
Our strategy leverages three key sources of returns – interest rates, credit and currency.
Of the three, we believe that alpha based on meticulous selection of corporate credits is
increasingly important. While the China corporate bond market is rapidly growing, it can be
a challenge to navigate for investors without the necessary research teams.
Therefore, we believe that by using a risk-controlled investment approach emphasising
extensive on-the-ground proprietary research, we can consistently achieve attractive riskadjusted returns in Chinese fixed income.
Figure 1: Manulife Asset Management China bond strategy cumulative performance3
Performance (Rebased to 100)
135
+30.0% (USD terms)
130
+28.4% (CNY terms)
125
120
115
110
105
100
0
/1
11
1
/1
05
1
/1
11
2
/1
05
2
/1
11
3
/1
05
3
/1
11
4
/1
05
4
/1
11
5
/1
05
5
/1
11
6
/1
05
Manulife Asset Management China bond strategy (USD terms)
Manulife Asset Management China bond strategy (CNY terms)
What is the strategy’s benchmark, and what is the rationale of employing this
benchmark?
The strategy’s benchmark is the Market iBoxx ALBI China Onshore (1-10 years) Bond Index.
Despite the sheer size of the China bond market, there are aspects of the market which are
still evolving and in development, very much like other emerging markets. Over the past
five years, we have seen a dispersion in the quality of benchmark provides; some are not
entirely investable, while others have exhibited unreliable performance due to stale pricing of
holdings.
Therefore, while our benchmark may not be the most ideal reflection of our investment
universe, it is one which we are comfortable with in view of the quality of information
provided.
3. Source: Manulife Asset Management, 30 November 2010 to 31 May 2016
3
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Tell us more about your approach to managing credit risk.
Independent analysis in
managing credit risk is most
ideal to us given China’s
still-evolving corporate
transparency culture and
differing financial reporting
standards.
In most developed bond markets, credit ratings from one of the three major international
ratings agencies – Fitch, Moody’s or Standard & Poor’s – serve as a standardised starting
point for evaluating credit and other fixed income investment risk factors. However, this is
not be the case for China.
Just as China remains an emerging bond market, its domestic credit rating system remains
nascent. Local rating standards are still developing, and the process is hampered by the
nation’s still-evolving corporate transparency culture.
Given these scenarios, we believe that independent analysis, rather than third-party
ratings, should be used when investing in the China corporate bond market.
What factors do you consider in the process of evaluating credits?
Our in-house credit analysis approach to Chinese corporate bonds takes two key factors
into consideration.
We believe bottom-up
fundamental analysis is key
to assess issuer’s business and
financial risk profile.
The first factor is a bottom-up fundamental analysis. Similar to the corporate credit
selection in most markets, this aspect involves carefully analysing an issuer to evaluate its
business risk profile. This will encompass its sales and operating performance, as well as
primarily qualitative factors such as industry trends, business strategies, corporate history
and management quality.
The other factor, and one which in our view is the “x-factor” for credit analysis in China,
is policy risk. Changes in government policy have had significant impact on the Chinese
bond market, and have underscored the importance of a prudent and in-depth researchbased approach.
Can you elaborate more on policy risk?
For example, a recent government pledge to allow the market to play a ‘decisive’ role
in resource allocation was accompanied by the caveat that the state would remain
‘dominant’ in the economy.
When evaluating policy risk, the key question we ask is: is the company a state-owned
enterprise (SOE), or is it related to one? This is because SOEs have played a key role in
building China’s economy over the past two decades, and many continue to benefit from
preferential access to bank lending, state subsidies and administrative support.
Changes in policy can impact
SOEs and private companies
differently.
For private companies, however, policy risk must be evaluated from another perspective
altogether. In this case, it is necessary to consider how the business fits into the
government’s policy objectives, which in turn could translate into favourable policy
treatment, direct or indirect subsidies, or even liquidity support from onshore financial
institutions if the need arises.
4
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
What other market considerations specific to the China bond market should
investors be aware of?
Basically, the onshore Chinese credit market can be subject to the same risk factors as
all major international bond markets. Still, there are some intricacies that are specific to
the Chinese market. These include liquidity or execution risk, currency risk, corporate
governance and credit differentiation.
Too many first–time issuers
for investors to choose from.
Like many rapidly growing emerging bond market, the onshore Chinese corporate bond
market has a high proportion of first-time issuers, so limited investment appetite could
constrain liquidity.
Long-tenor bonds can lack
liquidity.
Generally speaking, the tenor of China bonds can go up to 50 years. However,
longer-dated bonds are not actively traded after issuance. This is largely because they are
usually targeted by liability-driven investors who adopt a buy-and-hold strategy.
Our strategy predominantly focuses on the 1 to 10-year end of the yield curve as it
generally offers more liquidity to investors. These shorter-tenor bonds are sometimes
underappreciated by investors until periods of stress, such as the recent 2013 credit crunch
in China. Therefore, our strategy has a strategic duration of around 4.5 years.
What about currency risk?
We expect the renminbi to continue appreciating over the long term, as it internationalises
to a global reserve currency. However, as the sudden devaluation of the currency in 2015
has shown, we can likely expect higher currency volatility going forward. We therefore
believe that the days of easy currency returns are behind us.
Our CNY onshore bond strategy aims to provide investors with predominantly renminbidenominated exposure. However, our strategy can offer the flexibility to hedge renminbi
exposure when required.
And how about corporate governance and credit differentiation?
In-depth research is required
to fully assess the credit risk
of a growing number of firsttime issuers.
Investors should be mindful that many Chinese companies remain relatively opaque, and
that financial reporting standards in the country are still evolving. This is of particular
concern as there are an increasing number of first-time issuers in the market, and it
often requires significant research resources to get a clear picture of the credit risk level
associated with some of these issuers.
The price actions of corporate bonds have exhibited lack of credit differentiation, where
credit spreads from low to high quality spectrum have moved very much in tandem with
each other. We expect this to evolve over time, as the China bond market matures and
international investor ownership increases. This could be catalysed by a credit default, as
lower quality bonds have historically widened more under periods of stress - similar to
those in developed markets.
5
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
What are the key developments that would present opportunities for Chinese
bond investors?
A more open China bond
market, with widening
global access and
potential inclusion of
onshore bonds into global
bond indices, can present
opportunities.
In the near term, one key development on our radar is the widening of access of the
interbank bond market in China. In early March, the People’s Bank of China announced
that it would allow more qualified institutional investors to enter the market on a
registration basis4. We will be keenly keeping track of the process and taxation, the
potentially faster registration process, as well as approval details.
The access expansion may also pave the road for inclusion of onshore China Bonds into
global bond indices, and is expected to trigger a significant increase in global investor
appetite for Chinese fixed income. A more opened bond market enables the renminbi to
become more internationalised, and may eventually lays down the path for it to become a
reserve currency.
What about the “One Belt One Road” plan?
China to export capital
to sectors which offer a
comparative advantage,
or are experiencing
overproduction and
overcapacity.
We do believe the “One Belt One Road” initiative may also present opportunities for
investors, as it allows China to export its capital in sectors of the economy where it has
a comparative advantage. Examples include railway and manufacturing sectors. The
initiative may also allow China to relieve sectors that are experiencing overproduction and
overcapacity, particularly steel and construction sectors.
According to Asian Development Bank estimates, around US$750 billion will be
spent on infrastructure investment annually from 2010 to 2020. From a supply and
currency financing perspective, we believe the programme is likely to begin with US
dollars. But over time, Chinese financial institutions are likely to favour the use of
renminbi for financing infrastructure products, which in turn further promotes renminbi
internationalisation.
From a credit perspective, this may provide a backdrop for credit positive developments to
bond issuers who can effectively iron out their overcapacity issues.
4. People’s Bank of China, 6 May, 2016. http://www.pbc.gov.cn/jinrongshichangsi/147160/147171/147358/147400/3058889/index.html
6
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
How can Chinese bonds fit within the context of a global investment portfolio?
Onshore Chinese bonds can deliver significant diversification benefits, given its low
correlation to most other major global asset classes (see Figure 2).
Chinese bonds exhibit low
correlation with other major
asset classes.
Figure 2: Return correlation between CNY onshore corporate
bonds and major global asset classes over the past 10 years5
0.83
CNY Government bonds
0.23
US Treasuries
0.11
Global bonds
Euro government bonds
0.06
Money markets (Cash)
0.05
Real estate
6%
Main Policy Rates
0.04
Asian bonds (ex-Japan)
0.01
Euro corporate bonds
-0.03
Global corporate bonds
-0.06
Emerging market debt
-0.08
US equities
-0.09
US corporate bonds
-0.10
European equities
4%
2%
-0.12
-0.12
2016
2015
2014
2013
2012
2004
2011
0%
2010
-0.18
China Equities -0.25
2009
-0.18
Asian equities (ex-Japan)
2008
Emerging market equities
2007
-0.17
2006
Global high yield bonds
2005
Asset Classes
8%
1.00
CNY Corporate bonds
Global equities
Figure 3: The People’s Bank of China monetary policy
versus major central banks6
-0.40-0.20 0 0.200.400.600.801.00
China
Return correlation to onshore CNY corporate bonds
US
Eurozone
UK
Japan
We believe this can be partially explained by China’s independent monetary cycle relative
to the developed world (see Figure 3). For example, the correlation between changes in
monetary policy by the People’s Bank of China (PBoC) and US Federal Reserve is 0.15 over
the past 10 years.
Chinese bonds also have
negative correlation with the
local equity market.
Furthermore, we also observed China onshore bonds have a negative correlation to the
China A-share market (as seen in Figure 2). The Chinese equity market is dominated by
retail investors, while the Chinese bond market is predominantly owned by institutional
investors. In recent times, the asset class has seemingly become “safe haven” amid
negative investor sentiment towards the Chinese equity market.
This suggests that by adopting a balanced approach to portfolio allocation, Chinese bonds
may help investors diversify portfolio risk away from the local equity market.
5. Source: Bloomberg and Manulife Asset Management, 30 April 2016. In US dollar terms for the period 30 April 2006 to 30 April 2016 unless otherwise noted. Asian bonds (ex-Japan) = 50% HSBC Asian
Local Bond Index + 50% HSBC Asian Dollar Bond Index; Asian equities (ex-Japan) = MSCI AC Asia Pacific ex Japan Index; China equities = Shanghai Shenzhen CSI 300 Index; Emerging market debt
= JPMorgan EMBI Global Total Return Index; Emerging market equities = MSCI Emerging Markets Index; Euro corporate bonds = BofA Merrill Lynch Euro Corporate Index; Euro government bonds =
BofA Merrill Lynch Euro Government Index; European equities = MSCI Europe Index; Global bonds = BofA Merrill Lynch Global Broad Market Index; Global corporate bonds = BofA Merrill Lynch Global
Corporate Index; Global equities = MSCI World; Global high yield = BofA Merrill Lynch Global High Yield Index; Money markets = BofA Merrill Lynch US Dollar 3-Month Deposit Offered Rate Average
Index; CNY corporate bonds = BofA Merrill Lynch China Corporate Index; CNY government bonds = HSBC China Local Currency Government Bond Index; Real estate = Dow Jones Composite REIT
Total Return Index; US corporate bonds = BofA Merrill Lynch US Corporate Index; US equities = S&P 500 Index; US Treasuries = BofA Merrill Lynch US Treasury Index. Risk is measured in terms of the
standard deviation. You cannot invest directly into an index.
6. Source: Bloomberg and Manulife Asset Management, 31 May 2016
7
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Can you tell us more about the team behind your strategy?
A large team of experienced,
on-the-ground fixed income
investment professionals
across Asia to research and
cover China-related issues.
The overall Asian Fixed Income team consists of more than 50 investment professionals,
located in 10 territories across Asia. Within the team, there are over 10 credit analysts
dedicated to China-related fixed income. Based both in and outside Mainland China, they
cover Chinese fixed income issued in onshore and offshore markets respectively.
Key to our expertise is having on-the-ground experts who are able to speak the local
language, meet with policymakers and understand local companies. This gives us the
information advantage over our peers. More importantly, given the lack of ratings by
international agencies in the onshore Chinese credit space, having a substantial on-theground research team covering Chinese issues is vital.
The key role of our credit research team is to conduct fundamental analysis, and then
assign an internal rating to each issuer. Thereafter, the portfolio management team makes
investment decisions based on the proposed internal rating, as well as other factors such as
relative value analysis and the macroeconomic outlook.
Japan (10)
Hong Kong (20)
China (7)
Taiwan (4)
Vietnam (2)
Philippines (1)
Thailand (2)
Singapore (4)
Malaysia (5)
Indonesia (7)
Source: Manulife Asset Management, April 2016.
8
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Does the team work with other resources within the organisation?
Our on-the-ground
investment teams provide us
an information advantage.
We have on-the-ground investment teams located in Mainland China to provide us timely
policy and regulatory development updates on the local markets.
Outside of Greater China, we also regularly interact with our pan-Asian and global bond
teams, who provide us with their views on the Chinese market from an Asian as well as
global macroeconomic perspective. This helps us understand global investor sentiment
towards emerging markets, which is important as China works towards internationalising
the Renminbi (RMB), and opening its capital markets to foreign investors.
Tap into the tremendous potential of the China bond market
Global appetite for Chinese
fixed income to increase.
The China bond market has grown rapidly over the past decade, and we do not expect the
pace to slacken in the near future. We believe that the “One-Belt One-Road” initiative and
the accompanying changes to corporate financing practices, coupled with further opening
of China’s capital markets, will continue to drive bond markets expansion going forward.
In all, we believe there are three compelling reasons to invest in Chinese bonds.
First, as China continues to undertake reforms to open up its capital markets and
internationalise its currency, we expect to see an increasing number of global investors to
look to Chinese bonds, as the RMB secures status as a global reserve currency.
Second, the yield premium of Chinese bonds versus other developed markets makes the
asset class an attractive investment proposition.
And last but not least, the low correlation between Chinese bonds and other major asset
classes illustrates the potential benefits for foreign investors from a portfolio diversification
perspective.
That said, we are also conscious of the risks involved, especially as domestic credit ratings in
China do not offer the same level of credit differentiation as investors have come to expect
from ratings in major international markets. This raises the possibility of investors exposing
themselves to risk levels that they are not being rewarded for.
We therefore believe that the key to deriving attractive returns in China’s onshore bond
market is to undertake bottom-up, fundamental analysis of a company’s standalone business
and financial risk, while also evaluating its relationship to China’s evolving policy landscape.
This is the only reliable way, in our view, to determine the true risk-return proposition of any
potential onshore renminbi bond investment – and it is the foundation behind the expertise
of our investment process.
Our Beliefs
Why China Bonds?
World’s third largest
bond market, too big
to ignore, compelling
diversification benefits.
9
Why This Strategy?
Why Manulife AM?
High quality,
Go-Anywhere bond
portfolio to navigate
China bond market.
A pioneer in RMB
fixed income with
extensive Greater
China credit resources.
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
About Paula Chan
Paula is a Managing Director and Senior Portfolio Manager with the Fixed Income team.
Based in Hong Kong, she is responsible for the firm’s on- and off-balance-sheet Hong Kong
dollar and renminbi bond portfolios. Paula also oversees fixed income investments in Taiwan
and liaises with the firm’s onshore China joint ventures, Manulife TEDA and Manulife
Sinochem* to ensure comprehensive coverage of the Greater China bond market.
Paula has over 17 years of fixed income experience. Prior to joining Manulife Asset
Management, she was a money market and proprietary trader with Barclays Capital and
Standard Chartered Bank Hong Kong, with a focus on interest rate and forex trading
specialising in Hong Kong dollar and G7 currencies.
Paula holds a Master of Business in banking and finance from Monash University in Australia
and holds the Chartered Market Technician (CMT) designation.
Best
RMBOffshore
Offshore Manager
Manager
Best
RMB
China
FixedIncome
IncomeTeam
Term
China
Fixed
Winner in the “China (CNH)
Market” catagory
“Long-Only Fixed Income Fund
Manager of the Year” for RMB bonds
Paula Chan has been named among the
“Most Astute Investors in Local Currency Bonds”
in The Asset’s Benchmark research survey for eight
consecutive years, from 2009 to 2016.
* Manulife-Sinochem Life Insurance Co. Ltd is a joint venture company between Manulife (International) Limited (51%) and the Sinochem Finance Co. Ltd. (core member of the Sinochem Group (49%)).
Manulife TEDA Fund Management Co. Ltd is a joint venture between Manulife Financial (49%) and Northern International Trust (51%).
10
Navigating China’s Booming Bond Market:
Marking over 5 years of expertise in China bond strategy
Manulife Asset Management (Asia)
CNY Bond Composite
Composite
Composite
Benchmark Composite
Benchmark
Number of
Composite Composite Total Firm Year
Gross Return
Net Retur
ReturnAssets 3-Yr St Dev
3-Yr St Dev
Portfolios
Dispersion
Assets
Assets
(%) (%) (%) (%)*(%)* (%)# ($000)($000)
2015
3.15% 2.54% 2.70%3.15%2.91% <5
nm 49,506
34,537,613
2014
6.41% 5.77% 5.93%2.49%2.30% <5
nm 94,054
32,023,712
2013
2.26% 1.65% 5.74%2.28%1.59% <5
nm114,410
28,021,290
2012
4.02%
2011 10.30%
a
2010 1.14%
3.40%
4.40%
n/a
n/a
<5
nm
103,21725,931,482
9.65%
8.79%
n/a
n/a
<5
nm
75,94422,879,031
1.09%
1.31%
n/a
n/a
<5
nm
66,49920,160,891
MManulife Asset Management (“Manulife AM”) is the institutional asset management arm of Manulife Financial Corporation. Manulife AM operates
across 10 different markets in Asia - Hong Kong, Japan, Taiwan, China, Singapore, Indonesia, Malaysia, Thailand, Vietnam and the Philippines. The local
teams in each region in Asia are interconnected and form part of our global network of investment professionals, spanning 16 countries worldwide.
Manulife Asset Management (Hong Kong) Limited is a wholly-owned subsidiary of Manulife Financial Corporation. The brand, Manulife Asset Management
(Asia) (“Manulife AM (Asia)” or the “Firm”), is used to market the institutional products of Manulife Asset Management (Hong Kong) Limited and
encompasses those assets managed, and sub managed by Manulife Asset Management (Hong Kong) Limited on behalf of its third party institutional
clients which may also include collective investment schemes.
Manulife Asset Management (Asia) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this
report in compliance with the GIPS standards. Manulife Asset Management (Asia) has been independently verified for the periods 1 January 2006 to 31
December 2014. The verification report(s) is/are available upon request. Verification assesses whether (1) the firm has complied with all the composite
construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present
performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.
The CNY Bond strategy seeks to provide capital appreciation and income generation, by investing primarily in RMB denominated debt instruments that are
listed on either the Shanghai or the Shenzhen Stock Exchanges and issued by the Mainland China Government as well as corporations in Mainland China
(“Mainland China Listed RMB Debt Instruments”). Gross performance results do not reflect the deduction of investment management fees, and are net
of commissions and foreign withholding tax. Net performance results reflect the application of the highest investment management fee charged to gross
performance results. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size.
This presentation is intended for institutional investors and the standard investment advisory fee schedule is 0.60% on the first US$50 million; 0.50%
on the next US$50 million and 0.40% thereafter. A complete list and description of the Firm’s composites and additional information regarding policies
for calculating and reporting returns are available upon request. Because the financial market is influenced by a variety of changing conditions, past
performance is not a guarantee of future results. Dispersion of annual returns is measured by an asset-weighted standard deviation calculation of gross
of fee returns. The Firm determined that composite dispersion is not meaningful when there are 5 or fewer accounts in the composite for the entire
calendar year.
New accounts are generally eligible for inclusion in the composite at the beginning of the first full calendar month under management and are removed
from the composite at the end of their last full month under management. There is a US$5 million minimum asset requirement to be eligible for inclusion
in the composite. Prior to 1 July 2014, the minimum asset requirement was US$20 million. Performance is reported in U.S. dollar. CNY Bond Composite
was incepted on 1 December 2010 and created on 1 January 2011.
Following the expiration of QFII’ lockup period, benchmark changed from a blended index comprised of 70 % Shanghai T-Bond Index and 30% Citi Lux
Cash rate on 23 February 2011 to Shanghai T-Bond Index. The Shanghai T-Bond Index is designed to track Government bonds on the Shanghai Stock
Exchange. On 1 January 2014, the benchmark changed from Shanghai T-Bond index to HSBC China Local Currency Government Bond Index (1-10 years).
The HSBC China Local Currency Government Bond (1 - 10 years) Index measures the performance of onshore RMB-denominated bonds issued by the
People’s Republic of China with maturities between one and ten years.
* 3-year annualized ex-post standard deviation for composite and benchmark is n/a for period less than 3 years.
# nm is acronym for “not meaningful”.
a
Performance is shown since 1 December 2010.
11
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Manulife Asset Management is the asset management division of Manulife Financial. Manulife Asset Management’s diversified group of companies and affiliates provide comprehensive asset
management solutions for institutional investors, investment funds and individuals in key markets around the world. This investment expertise extends across a full range of asset classes including
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States, Canada, the United Kingdom, Japan, Hong Kong, and throughout Asia. Additional information about Manulife Asset Management may be found at www.manulifeam.com. Manulife Asset
Management, Manulife and the block design are trademarks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.
This material, intended for the exclusive use by the recipients who are allowable to receive this document under the applicable laws and regulations of the relevant jurisdictions, was produced by and
the opinions expressed are those of Manulife Asset Management as of the date of writing and are subject to change. The information and/or analysis contained in this material have been compiled
or arrived at from sources believed to be reliable but Manulife Asset Management does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept
liability for any loss arising from the use hereof or the information and/or analysis contained herein. Information about the portfolio’s holdings, asset allocation, or country diversification is historical
and is not an indication of future portfolio composition, which will vary. Neither Manulife Asset Management or its affiliates, nor any of their directors, officers or employees shall assume any liability
or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein.
The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations, and is only as current
as of the date indicated. There is no assurance that such events will occur, and may be significantly different than that shown here. The information in this material including statements concerning
financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. This material was prepared solely for
informational purposes and does not constitute a recommendation, professional advice, an offer, solicitation or an invitation by or on behalf of Manulife Asset Management to any person to buy or sell
any security. This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any investment products or to adopt any investment strategy. Nothing
in this material constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise
constitutes a personal recommendation to you. Past performance is not an indication of future results.
Proprietary and Confidential Information – Please note that this material must not be wholly or partially reproduced, distributed, circulated, disseminated, published or disclosed, in any form and for
any purpose, to any third party without prior approval from Manulife Asset Management.
Presented by Manulife Asset Management (Asia), a division of Manulife Asset Management (Hong Kong) Limited.
Additional information about Manulife Asset Management may be found at www.manulifeam.com. Manulife Asset Management, Manulife and the block design are trademarks of The Manufacturers
Life Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.
Hong Kong: This material has not been reviewed by the Securities and Futures Commission (“SFC”).
South Korea: This material is intended for Designated Professional Investors under the Financial Investment Services and Capital Market Act (“FSCMA”). Manulife Asset Management does not make
any representation with respect to the eligibility of any recipient of these materials to acquire any interest in any security under the laws of South Korea, including, without limitation, the Foreign
Exchange Transaction Act and Regulations thereunder. An interest may not be offered, sold or delivered directly or indirectly, or offered, sold or delivered to any person for re-offering or resale, directly
or indirectly, in South Korea or to any resident of South Korea, except in compliance with the FSCMA and any other applicable laws and regulations. The term “resident of South Korea” means any
natural person having his place of domicile or residence in South Korea, or any corporation or other entity organised under the laws of South Korea or having its main office in South Korea.
China: No invitation to offer, or offer for, or sale of any security will be made to the public in China (which, for such purposes, does not include the Hong Kong or Macau Special Administrative Regions
or Taiwan) or by any means that would be deemed public under the laws of China. The offering document of the subject fund(s) has not been submitted to or approved by the China Securities
Regulatory Commission or other relevant governmental authorities in China. Securities may only be offered or sold to Chinese investors that are authorised to buy and sell securities denominated
in foreign exchange. Prospective investors resident in China are responsible for obtaining all relevant approvals from the Chinese government authorities, including but not limited to the State
Administration of Foreign Exchange, before purchasing an interest in the subject fund(s).