Annual General Meeting 26 January 2015 Agenda Company objectives, - PowerPoint PPT Presentation

JPMorgan Chinese Investment Trust plc Annual General Meeting 26 January 2015

Agenda  Company objectives, performance and market performance  Portfolio update  Market outlook 1

JPMorgan Chinese Investment Trust plc  Investment objectives – To provide long term capital growth by investment in 'Greater China' companies i.e. companies which are quoted on the stock exchanges of China, Hong Kong and Taiwan or which derive a substantial part of their revenues or profits from these territories  Features – Includes Hong Kong and Taiwan to broaden investment opportunity – The Company uses J.P. Morgan’s "on the ground" expertise and local presence to find the best companies in the "Greater China" region (China, Taiwan, Hong Kong) – Strong focus on first-hand company visits and research to discover attractively-valued stocks – +/- 25% active positions against the benchmark in China, Hong Kong and Taiwan  Benchmark – MSCI Golden Dragon Index in sterling terms  Gearing – To use gearing up to 15% when appropriate. Currently 7.5%  Total Assets of £167.7m* * As at 31 December 2014 Source: J.P. Morgan Asset Management 2

Results Highlights – 12 months to 30 September 2014 Return to ordinary shareholders: 12.0% Return on net assets: 7.8% Benchmark return*: 6.8% Proposed dividend: 1.6p * MSCI Golden Dragon Index (NDR) (in sterling terms) Source: J.P. Morgan Asset Management, Morningstar, Thomson Reuters Datastream. As at 30 September 2014. 3

NAV and Benchmark Performance As at 31 December 2014 NAV Performance* % Benchmark** % 4Q 2013 4.9% 1.5% 1Q 2014 -4.9% -3.9% 2Q 2014 4.4% 4.9% 3Q 2014 3.8% 4.3% 4Q 2014 10.1% 8.8% 1 Year to 31 December 2014 13.1% 14.4% After a strong 2013, we underperformed in the growth sell-down in early 2014 * Undiluted returns ** MSCI Golden Dragon Index (NDR) (in sterling terms) Source: J.P. Morgan Asset Management, Fundamental Data, Thomson Reuters Datastream 4

Share Price, NAV and Benchmark Performance Performance to 31 December 2014 Price Index GBP 300 Net Asset Value 261.7 Share Price 250 231.7 Benchmark* 200 182.1 150 100 55.8 54.8 44.6 40.2 50 34.2 26.2 14.4 13.1 11.4 0 1 Year 3 Years 5 Years 10 Years Despite underperforming in 2014, our mid-long term track record remains strong * Undiluted return on net assets ** MSCI Golden Dragon Index (NDR) (in sterling terms) Source: J.P. Morgan Asset Management / Fundamental data / Thomson Reuters Datastream / Bloomberg / MSCI 5

Performance of the world vs Greater China stock markets 12 months to 31 December 2014 Total Return (GBP) S&P 500 20.0 MSCI Taiwan 16.2 MSCI China 14.7 MSCI Golden Dragon 14.4 MSCI Hong Kong 11.6 MSCI AC Asia ex Japan 11.3 FTSE All Share 1.2 % 0 5 10 15 20 25 US Equities continued to be the top performing market Source: Thomson Reuters Datastream 6

Agenda  Company objectives, performance and market performance  Portfolio update  Market outlook 7

JPMorgan Chinese Investment Trust plc As at 31 December 2014 Asset Allocation vs. the Benchmark* % 70 58.7 60 Portfolio 48.9 50 Benchmark* 40 28.3 30 24.4 22.8 16.9 20 10 0 China Taiwan Hong Kong We retain our large overweight in China given valuations and significant stock level opportunities * MSCI Golden Dragon Index (NDR) (in sterling terms) Source: J.P. Morgan Asset Management, MSCI The Fund is an actively managed portfolio. Holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. 8

JPMorgan Chinese Investment Trust plc As at 31 December 2014 Sector Allocation vs. the Benchmark* Key Positions: • Secular growth – health care, internet, consumption, environment % • Exposure to monetary easing/domestic liquidity – mid-sized banks, insurance • Niche technology stocks 44.7 Portfolio 39.6 Benchmark* 27.9 22.5 17.2 16.6 13.4 11.5 10.5 9.6 9.5 7.4 10.0 8.7 6.9 6.3 6.6 6.3 6.3 7.6 5.4 6.4 4.9 5.8 4.3 4.1 3.9 4.5 3.2 3.5 3.0 2.6 1.1 0.5 0.0 -7.5 Banks Insurance Real Estate Diversified Semiconductors Software & Technology Financials Information Industrials Health Care Consumer Telecom Utilities Energy Consumer Materials Cash Financials & Services Hardware & Technology Discretionary Services Staples Semiconductor Equipment Equipment Financials Information Technology * MSCI Golden Dragon Index (NDR) (in sterling terms) Source: J.P. Morgan Asset Management, MSCI The Fund is an actively managed portfolio. Holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. 9

JPMorgan Chinese Investment Trust plc Top 10 Holdings Total number of holdings: 67 Portfolio Benchmark* Holdings # Country / (Classification) % % Taiwan Semiconductor Manufacturing Taiwan 8.2 6.6 6.9 Tencent Holdings China (Hong Kong P Chip) 4.8 AIA Group Hong Kong 5.0 4.1 China Construction Bank China (Hong Kong H Shares) 4.8 3.2 Cheung Kong (Holdings) Hong Kong 3.5 1.5 China Telecom China (Hong Kong H Shares) 2.9 0.5 2.4 China Minsheng Banking China (Hong Kong H Shares) 0.4 Agricultural Bank of China China (Hong Kong H Shares) 2.2 0.6 BOC Hong Kong (Holdings) Hong Kong 2.2 0.8 Fubon Financial Holding Taiwan 2.1 0.6 40.2 23.1 Concentration Percent of Total Market Cap (USD) Portfolio Benchmark* Top 10 Holdings 43.2 > 100 bn 21.2 18.5 Top 20 Holdings 63.1 50 bn <> 100 bn 5.8 8.5 Top 30 Holdings 77.5 10 bn <> 50 bn 36.1 40.6 5 bn <> 10 bn 20.0 15.9 3 bn <> 5 bn 12.0 8.7 1 bn <> 3 bn 9.9 7.6 < 1 bn 2.5 0.2 # As at 28 Nov 2014. * MSCI Golden Dragon Index (NDR) Source: J.P. Morgan Asset Management, as at 31 Dec 2014. The companies/securities above are shown for illustrative purposes only. Their inclusion should not be interpreted as a recommendation to buy or sell. The holdings represent the current holdings of the fund. However, it cannot be assumed that these types of investments will be available to or will be selected by the fund in the future. 10

JPMorgan Chinese Investment Trust plc MSCI Breakdown (%) Portfolio Benchmark* H Shares 30.9 27.1 Taiwan 26.2 28.3 18.2 Hong Kong 22.8 P Chip 13.5 9.6 Red Chip 8.1 11.8 China Others 7.0 0.1 A Shares 2.5 - 1.1 B Shares 0.2 Cash -7.5 - 100.0 100.0 * MSCI Golden Dragon Index (NDR) Source: J.P. Morgan Asset Management, as at 31 Dec 2014 The Fund is an actively managed portfolio, holdings, sector weights, allocations and leverage, as applicable are subject to change at the discretion of the Investment Manager without notice. 11

Agenda  Company objectives, performance and market performance  Portfolio update  Market outlook 12

What will the year of the sheep bring?  China is entering a ‘new normal’ phase where debt/GDP is being stabilized and incremental reforms are being rolled out using the anti-corruption campaign as the stick (and survival as the carrot)  GDP growth is likely to continue a deceleration path towards a theoretical sustainable rate of 6.5% in the next 5 years  There will be growth areas: organic (e-Commerce, SUV auto sales), policy-driven (environmental) or both (healthcare)  We also see opportunities in the financials sector given expected monetary easing Source: J. P. Morgan Asset Management. As at 31 Dec 2014. The targets and aims provided are the Investment Manager’s targets and aims only. There is no guarantee that these targets an d aims will be achieved. The opinions and views expressed here are as at the date of this document, which are subject to change and are not to be taken as or construed as investment advice. 13

Industrial economy has been constrained by credit growth Pre-tax ROE: Industrial SOEs & Others Weak power generation signals deceleration in industrials % 30 1,500 15% National power generation (M MWh) SOEs Others 25 1,400 y/y% 20 10% 1,300 15 1,200 10 5% 1,100 5 0 1,000 0% 1996 1998 2000 2002 2004 2006 2008 2010 2012 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Source: Credit Suisse. As at 30 April 2014. Source: China Electricity Council. As at end Oct 2014 Commodity price was affected by demand slowdown Global trade is no longer a key driver for China growth 40% 40% Coal (5500Kcal/kg QHD) Steel (Avg HRC) Copper (SHFE ) 30% 20% 20% 0% 10% -20% 0% -40% 1/11 5/11 9/11 1/12 5/12 9/12 1/13 5/13 1/11 7/11 1/12 7/12 1/13 7/13 1/14 7/14 Source: CCTD, Bloomberg, Digital Cement, Mysteel. As at end Oct 2014. Source: Ministry of transport in China. As at end Oct 2014 14

China’s loosening initiatives … followed by an announcement to broaden the The PBoC surprised the market with an interest rate cut… definition of deposits Percentage PBoC will expand the base for calculating loan-to-deposit ratios by  8 including savings geld by banks for non-deposit taking financial China 1 Year Benchmark Deposit Rate institutions into bank deposits China Lending Rate 7 Under current rules, banks in China are allowed to lend up to 75% of  their deposits held 6 The new definition should make an additional 5 – 5.5 trillion Yuan  available, which is expected to ease liquidity conditions and lower financing costs for domestic companies 5 4 3 2 08 09 10 11 12 13 14 PBoC = People’s Bank of China Source: FactSet. As at 31 Dec 2014. Source: Bloomberg, China Daily. As at 31 Dec 2014. 15