Over the month of September, Chinese markets rose sharply following the Chinese government's announcements of a series of measures aimed at countering China’s economic slowdown and boosting market sentiment.

Negative retail sales data (2.1% vs. 2.5% expected) and disappointing industrial production data (4.5% vs. 4.8% expected) forced the authorities to initiate the stimulus plan so eagerly awaited by the markets.

Three areas of stimulus has been announced: monetary easing, support for the real estate sector and support to the Equity markets.

One of the main measures is a 50-basis point cut in the reserve requirement ratio (RRR) for banks, freeing up 1 trillion RMB in liquidity.

Also, the PBoC has decided to align the existing mortgage loan rates with the new ones, reducing them by an average of 50 bps.

Finally, non-bank financial institutions are allowed to use “swap facilities” to obtain liquidity on the markets.

Against this backdrop, the fund delivered a positive performance, albeit below its reference indicator.

In particular, we benefited from a solid rebound in our Chinese investments, led by our consumer discretionary stocks Pinduoduo, Tal Education and VIPshop.

We were also supported by our investments in shared mobility company Didi and online and offline real estate platform Beike.

However, the lag versus our reference indicator was due to our high exposure to Taiwan, for diversification reasons, and also to our stock picking choices.

In fact, the main beneficiaries of these measures were state-owned companies, listed on domestic markets (A share markets), with opaque corporate governance, which we do not hold in the portfolio.

We welcome the Chinese government's major announcements, which are very positive for China's equities markets.

Although the Chinese government's recent announcements do not seem sufficient, on their own, to turn the Chinese economy around, this is a major turning point, as President Xi has shown that he is now putting the economy as a top priority.

If the rumours about the promise to recapitalize the major banks and the issuance of central government bonds are confirmed, this could provide the “big stimulus” the markets have been waiting for several months, and challenge investors' extremely negative stance on China.

However, at this stage, we feel it is still too early to change our medium- to long-term views on the Chinese economy. And we maintain our selective and cautious view given the global economic slowdown and the US presidential election.

We are closely monitoring each of our Chinese positions and their valuation, our aim being to remain disciplined in calibrating our positions. We have taken profit on some of our Chinese positions which have rebounded strongly in recent days, and for which the valuation argument has become less attractive.

We are closely monitoring each Chinese position and its valuation, our objective being to remain disciplined in position sizing. We are selectively trimming some positions that rebounded a lot, and where the valuation argument became less compelling. For other stocks, we are maintaining our positions.

At the beginning of the month, we had increased our exposure to Chinese stocks with very attractive valuations (Pinduoduo VIPshop). This decision has proved to be beneficial in the wake of the strong rebound we saw at the end of the month.