Unlocking Value

China Merchants China Director Investments (CMCDI, 133 HK) could learn from JPMorgan, Fidelity, HSBC and BlackRock, on how to narrow its share price discount to net asset value (NAV).

Like CMCDI, JPMorgan China Growth & Income plc is China-focused closed-end fund. It is now trading at price-to-NAV ratio of 0.86x as at 14 June 2024. JPMorgan proactively manages its discount to NAV through buying back shares:

The Board [of JPMorgan China Growth & Income plc] operates a share issuance and share repurchase programme which seeks to address imbalances in the supply of and demand for the Company’s shares within the market and thereby reduce the volatility and absolute level of the discount/premium to NAV per share…

Fidelity China Special Situations PLC, which is trading at price-to-NAV of 0.89x, is a particularly relevant peer, because (like CMCDI) it invests in both listed and non-listed shares.

Fidelity has a similarly proactive discount management policy through buybacks:

The Board [of Fidelity China Special Situations PLC] believes that investors are best served when the share price trades close to its NAV per share… A discount control mechanism is in place whereby we seek to maintain the Company’s discount in single digits in normal market conditions.

HSBC China Dragon Fund even implemented multiple redemption offers, to allow investors to redeem their units at NAV per share, as we wrote earlier.

After a high-profile battle with an activist hedge fund, BlackRock finally adopted a long-overdue share buyback tender offer program for its closed end funds.

It is time for CMCDI to do the same.

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招商局中国基金（“中国基金”，股票代号：133 HK）可以向摩根大通、富达、汇丰和贝莱德学习，缩小其股价与净资产价值（NAV）的折价。

中国基金同类型的基金包括由摩根大通（JPMorgan）管理的专注于中国的封闭式基金: JPMorgan China Growth & Income plc（摩根大通中国基金）。截至 2024年6月14日，其交易价格与净资产价值（NAV）的比率为0.86倍。根据其年报，摩根大通持续在积极的管理其价格与NAV的折价：

[摩根大通中国基金的]董事会有一个股份发行和回购计划，旨在解决市场上该公司股票供需不平衡的问题，从而降低公司股票的折价/溢价水平和波动性。

Fidelity China Special Situations PLC（富达中国特殊机会基金）也是一个特别相关的同类型基金，与中国基金类似，它既投资于上市公司股票也投资于非上市公司股票。

富达中国特殊机会基金其交易价格与NAV的比率为0.89倍，他们也有一个类似的积极折价管理政策：

[富达中国特殊机会基金的]董事会相信，只有当股价接近每股NAV时，投资者的利益得到最好的保障…在正常市场条件下，我们设立了折扣管理机制，以保持公司的折扣率在个位数。

正如我们之前所讨论的，汇丰中国翔龙基金（HSBC China Dragon Fund）甚至实施了多次赎回要约，允许投资者以每股净资产价值赎回其股份。

最近，在与一家激进对冲基金的一场高调较量之后，贝莱德终于为其封闭式基金采纳了一项早就应该实施的股票回购要约计划。

现在中国基金是时候采取同样的措施了。

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