Unlocking Value

Earlier, we wrote that many reputable listed closed-end funds implement “discount management programs”.

Fidelity China Special Situations plc (“Fidelity Fund”) is a good example.

Like China Merchants China Direct Investments (133 HK, “CMCDI”), Fidelity Fund (1) is focused on China and (2) invests in both liquid (i.e. listed) and illiquid assets.

Fidelity Fund has an explicit and long-running policy to maintain its discount (to net asset value) at less than 10%:

The Board [of the Fidelity Fund] 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.

Historically, when discount widened to 10-20%, Fidelity Fund bought back shares at market, until discount narrows to less than 10%.

Based on Fidelity Fund’s track record, even a small amount of share buybacks have successfully narrowed the discount to single digits.

Like how Federal Reserve manages market expectations on interest rates, discount management programs are self-fulfilling. The act of guiding a market towards a certain level of discount will cause the discount to narrow. Fidelity is a good example.

Year	The highest discount at which Fidelity Fund shares traded during the year	Amount of shares bought back during the year (as % of shares outstanding)	Fidelity Fund’s discount at year end
2023	15.2%	4.5%	9.7%
2022	10.4%	0.3%	7.5%
2021	13.2%	4.1%	1.1%
2020	17.7%	2.0%	8.6%
2019	14.2%	0.3%	7.9%

We, Argyle Street Management, believe that CMCDI should do the same.

We are now on WeChat and Whatsapp. Chat with us.

💬 WeChat 微信: ASM_Argyle

💬 WhatsApp: +852 6317 6371

🖥️ UnlockValueChinaMerchants.com

📧 ChinaMerchants@asmhk.com

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早前，我们写到很多著名上市封闭式基金都推行了“折价管理计划”（discount management programs）。

富达中国特殊机会基金（Fidelity China Special Situations plc，“富达基金”）就是一个很好的例子。

与招商局中国基金（“中国基金”，股票代码133.HK）类似，富达基金（1）专注于中国，并且（2）投资于流动性（即上市）和非流动性资产。

富达基金有明确且长期执行的政策，以将其折价（与净资产值相比）保持在10%以下：

[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。

从历史上看，当折价扩大到10-20%时，富达基金就会以市场价格回购股票，直至折价缩小到10%以下。

根据富达基金的业绩记录，即使是回购少量的股票，也可以成功地将折价缩小到个位数。

就像美联储管理市场对利率预期一样，折价管理计划也是自我实现的。折价管理计划可以引导市场朝着特定的折价水平发展，自然而然缩小股价折让。富达就是一个很好的例子。

年份	在年内交易的最高折价水平	年内回购的股份数量 （占已发行股份的百分比）	年末的折价/溢价
2023	15.2%	4.5%	9.7%
2022	10.4%	0.3%	7.5%
2021	13.2%	4.1%	1.1%
2020	17.7%	2.0%	8.6%
2019	14.2%	0.3%	7.9%

我们，Argyle Street Management，认为中国基金应该向富达基金学习，实施一个折价管理计划。

我们现在有了微信和WhatsApp，随时与我们联系：

💬 微信: ASM_Argyle

💬 WhatsApp: +852 6317 6371

🖥️ UnlockValueChinaMerchants.com

📧 ChinaMerchants@asmhk.com