IPREO REGIONAL FLOW OF FUNDS SERIES

Hong Kong

Q4 2017

Flow of Funds: Hong Kong

Market Overview

Ownership by Investor Region vs Issuer Region Ownership by Investor Style vs Issuer Region

Institutional Investment Flow Highlights

• In 2017Q4, Hong Kong equity fund flows remained positive (+$5.73B). The bulk of net inflows into the region continued to be driven by North American managers (+$3.69B) while UK & Ireland (+$2.67B) also had strong net inflow sin the fourth quarter. Index managers had the major contribution, extending the net inflows into the third consecutive quarter.

• The institutional net fund inflows came with strong yearly performance in Hong Kong equity market, which was the best-performing major market in Asia. The regional benchmark Hang Seng Index posted 35.99% yearly gain in 2017, outpacing other major indices. While geopolitical uncertainty was a major focal point in early 2017, risk appetite had since improved. The overall Asian markets had a solid year, shrugging off jitters faced at the end of last year over the potential trade and foreign policy implications the new administration of U.S. President Donald Trump would have on the region.

• The heavy-weight Hang Seng Index constituent Tencent Holdings posted 114% yearly gain, bolstered by strong earnings. Tencent, the company behind popular app WeChat, for a period of time surpassed Facebook in terms of market value in November.

• Tencent Holdings was also the Hong Kong company with the largest institutional net outflow in Q4 2017. The share price of Tencent Holdings posted a strong upswing in November, and the share saw profit-taking after reaching the yearly highest close at HK$430.00. Tencent Holdings had $2.98B net outflow from institutional investors in the quarter. The net outflow also drove Technology as the most sold sector by active managers.

• The top three most bought stocks in Hong Kong were in the Financial sector, which attracted both active managers and passive managers. The most bought stocks in financial sector were Wharf Real Estate Investment Co Ltd, Ping An Insurance Company of China Ltd, and China Construction Bank of Corporation.

• The strong capital flow from North America was mainly contributed by Index managers BlackRock Fund Advisors and The Vanguard Group, Inc, which posted net inflows of $2.61B and $1.80B into Hong Kong. UK & Ireland was the second largest source of capital. A total of five out of the top 10 buyers of the quarter were from UK & Ireland. The major buyers in the regions were Aberdeen Asset Managers and Schroder Investment Management, which bought $0.56B and $0.47B respectively. North America in the meantime also had investors reducing exposure in Hong Kong market, but the scale was relatively smaller compared to the buying side. The U.S.-based Active managers Capital World Investors (U.S.), and OppenheimerFunds sold $1.76B and $0.85B respectively in Hong Kong equity.

• Asian investors controlled 58.7% of Asian equities whilst in Hong Kong they held 41.7%. Asian institutional investors had four quarter consecutive net outflow. The largest Asian sellers in Hong Kong equities include First State Investments (Hong Kong), Ltd (-$0.57B), Morgan Stanley Investment Management Company (Singapore)(-$0.31B) and FIL Investment Management (Hong Kong), Ltd(-$0.25B).

• Hong Kong equities attracted more capital from North America than the overall Asian equities. A total of 34.5% of Hong Kong equities were controlled by North America-based investment managers, while a total of only 25.0% of equities in overall Asian markets were controlled by North American managers.

©2018 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any informational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.

-6,000.0

-4,000.0

-2,000.0

0.0

2,000.0

4,000.0

6,000.0

Asia N. America UK & Ireland W. Europe Scandinavia Rest of World

Net Change ($M) by Region

Q1-17 Q2-17 Q3-17 Q4-17

-3,000.0

-2,000.0

-1,000.0

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

AggGr./Growth

DeepVal./Value

Index GARP Specialty Yield Alternative

Net Change ($M) by Style

Q1-17 Q2-17 Q3-17 Q4-17

Asia

E. Europe 0.1%

Rest of World 0.4%

MENA 0.4%

Asia 58.7%

Scandinavia 3.6%

UK & Ireland 8.0%

W. Europe 3.8%

N. America 25.0%

Hong Kong

E. Europe 0.1%

Rest of World 0.6%

MENA 0.4%

Asia 41.7%

Scandinavia 5.1%

UK & Ireland 11.6%

W. Europe 6.0%

N. America 34.5%

Hong Kong

Alternative 1.3%

Yield 2.2%

Specialty 1.3%

GARP 5.8%

Index 19.0%

Deep Val./Value22.8%

Agg Gr./Growth47.7%

Asia

Alternative 1.2%

Yield 3.5%

Specialty 7.0%

GARP 4.3%

Index 13.1%

Deep Val./Value 25.1%

Agg Gr./Growth 45.6%

Flow of Funds: Hong Kong

Most Bought & Sold Stocks

©2018 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any informational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Q4-16 Q1-17 Q2-17 Q3-17 Q4-17

Active vs. Passive Investment (% Chg)

Active Passive

78.3% 76.5%

21.7% 23.5%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Hong Kong Asia

Ownership by Orientation vs Issuer Region

Active Passive

-4,000.0 -2,000.0 0.0 2,000.0 4,000.0

Basic Materials

Consumer Goods

Consumer Services

Energy

Financials

Healthcare

Industrials

Technology

Utilities

Most Bought & Sold Sectors - Active Investors

0.0 500.0 1,000.0 1,500.0 2,000.0

Basic Materials

Consumer Goods

Consumer Services

Energy

Financials

Healthcare

Industrials

Technology

Utilities

Most Bought & Sold Sectors - Passive Investors

Country / City

Total Equity

Assets ($M)

Value

($M)

Activity

($M)

#

Firms Country / City

Total Equity

Assets ($M)

Value

($M)

Activity

($M)

#

Firms

China (Beijing) 501,737.9 177,519.7 -46.8 34 United Kingdom (London) 3,090,969.3 91,787.0 3,012.8 187

Hong Kong (Hong Kong) 291,547.0 120,289.0 -755.2 147 Hong Kong (Hong Kong) 291,547.0 120,289.0 -755.2 147

United Kingdom (London) 3,090,969.3 91,787.0 3,012.8 187 United States (New York) 2,757,567.0 45,923.0 -439.6 100

United States (Malvern) 2,943,231.0 59,385.2 1,798.2 1 Singapore (Singapore) 328,266.2 45,674.8 -42.7 64

United States (San Francisco) 2,847,049.8 55,817.9 2,936.0 15 France (Paris) 511,130.4 7,965.0 -147.6 61

United States (New York) 2,757,567.0 45,923.0 -439.6 100 China (Shanghai) 174,977.1 10,131.4 -123.8 43

Singapore (Singapore) 328,266.2 45,674.8 -42.7 64 Canada (Toronto) 787,418.1 9,525.3 -13.5 43

United States (Los Angeles) 1,332,672.0 35,482.7 -1,479.6 16 Japan (Tokyo) 861,477.4 6,546.0 27.8 42

United States (Boston) 4,311,115.8 29,431.2 438.2 41 United States (Boston) 4,311,115.8 29,431.2 438.2 41

Norway (Oslo) 746,795.7 27,740.3 67.0 10 Taiwan (Taipei) 40,340.3 3,082.6 -252.1 40

United States (Austin) 453,235.6 14,364.3 -641.5 3 Switzerland (Zürich) 287,696.3 8,087.6 161.3 35

Netherlands (Amsterdam) 198,877.6 14,282.9 45.8 12 Sweden (Stockholm) 305,889.3 7,773.1 909.6 35

United Kingdom (Edinburgh) 360,230.3 11,494.4 -405.8 21 South Korea (Seoul) 79,655.8 2,915.3 -2.3 35

China (Shanghai) 174,977.1 10,131.4 -123.8 43 China (Beijing) 501,737.9 177,519.7 -46.8 34

Canada (Toronto) 787,418.1 9,525.3 -13.5 43 Australia (Sydney) 182,698.3 4,270.9 5.5 30

Includes Active & Passive Investors 748,849.2 4,349.5 737 Includes Active & Passive Investors 570,922.0 2,731.6 937

Top Invested Cities

MO

ST IN

VES

TED

MO

ST IN

VES

TOR

S

Security Industry Change $M

Wharf Real Estate Investment Co Ltd Real Estate 1,565.4

Ping An Insurance Co of China, LTD. Insurance 1,380.2

China Construction Bank Corporation Banking 1,288.1

China Literature Limited Computer Software and Services 667.5

CNOOC Limited Oil, Gas and Coal 509.0

AIA Group, LTD Insurance 373.8

BOC Hong Kong (Holdings), LTD Banking 361.5

China Life Insurance Company, LTD Insurance 330.1

China Mobile, LTD Telecommunications 318.4

Wuxi Biologics (Cayman) Inc. Biotechnology & Pharmaceuticals 299.5

Includes Active & Passive Investors 7,093.5

BOU

GH

T

Security Industry Change $M

Tencent Holdings, Ltd. Computer Software and Services -2,982.1

AAC Technologies Holdings, Inc. Consumer Durables -856.9

Samsonite International S.A. Consumer Non-Durables -521.3

ASM Pacific Technology, LTD Semiconductors -345.4

China Mengniu Dairy Company Limited Food, Beverage, and Tobacco -311.1

New China Life Insurance Company, LTD Insurance -269.2

Brilliance China Automotive Holdings Automotive -254.1

Industrial & Commercial Bank of China Banking -250.0

Sunny Optical Technology Co LTD General Industrials -219.0

Minth Group Limited Automotive -214.4

Includes Active & Passive Investors -6,223.4

SOLD

Flow of Funds: Hong Kong

Top Active & Passive Holders, Buyers & Sellers

©2018 Ipreo. All rights reserved. None of Ipreo, its affiliates, or any of their third party providers is liable for any informational errors, incompleteness, or delays, or for any actions or decisions taken by any person as a result of any information contained herein.

Firm Country Style Turnover Equity Assets ($M) Value ($M) Change ($M) % Portfolio % Portfolio Chg

China Investment Corporation, LTD (CIC) SWF China Growth Low 190,736.4 136,646.2 -18.3 71.6% -0.0%

The Vanguard Group, Inc. P United States Index Low 2,943,231.0 59,385.2 1,798.2 2.0% 3.1%

BlackRock Fund Advisors P United States Index Low 2,009,320.9 39,951.9 2,614.0 2.0% 7.0%

Norges Bank Investment Management (Norway) SWF Norway Value Low 703,146.5 26,760.0 -22.2 3.8% -0.1%

National Council of Social Security Fund SWF China Growth Low 35,419.0 25,901.2 0.0 73.1% 0.0%

Temasek Holdings Pte., LTD SWF Singapore Value Low 118,588.6 21,685.8 0.0 18.3% 0.0%

Capital World Investors (U.S.) United States Value Low 713,430.6 21,041.1 -1,762.3 2.9% -7.7%

Hang Seng Investment Management, LTD P Hong Kong Index Low 16,055.7 14,775.1 189.1 92.0% 1.3%

Dimensional Fund Advisors, L.P. (U.S.) P United States Value Low 429,964.6 13,871.2 -641.1 3.2% -4.4%

APG Asset Management N.V. Netherlands Yield Low 174,978.0 13,735.1 0.0 7.8% 0.0%

State Street Global Advisors Asia, LTD P Hong Kong Index Low 13,544.8 11,565.3 186.1 85.4% 1.6%

Capital Research Global Investors (U.S.) United States GARP Low 478,312.8 11,372.8 221.1 2.4% 2.0%

HSBC Global Asset Management (Hong Kong), LTD Hong Kong Growth Low 26,512.7 9,781.7 -77.2 36.9% -0.8%

FIL Investment Management (Hong Kong), LTD Hong Kong Growth Low 22,278.2 9,170.1 -251.9 41.2% -2.7%

Fidelity Management & Research Company United States Growth Low 942,505.3 9,024.1 77.0 1.0% 0.9%

JF Asset Management, LTD Hong Kong Growth Medium 26,597.1 7,966.2 -181.4 30.0% -2.2%

Schroder Investment Management (Hong Kong), LTD Hong Kong GARP Medium 18,276.0 7,413.2 57.5 40.6% 0.8%

J.P. Morgan Investment Management, Inc. United States Growth Low 295,057.0 7,336.3 183.9 2.5% 2.6%

BlackRock Investment Management (U.K.), LTD United Kingdom Growth Low 407,207.3 7,322.0 409.3 1.8% 5.9%

OppenheimerFunds, Inc United States Growth Medium 167,975.0 6,864.5 -852.4 4.1% -11.0%

461,568.9 1,929.2

Firm Country Style Turnover Equity Assets ($M) Value ($M) Change ($M) % Portfolio % Portfolio Chg

BlackRock Fund Advisors P United States Index Low 2,009,320.9 39,951.9 2,614.0 2.0% 7.0%

The Vanguard Group, Inc. P United States Index Low 2,943,231.0 59,385.2 1,798.2 2.0% 3.1%

Sjunde AP-Fonden (AP 7) P Sweden Index Low 44,333.6 2,092.9 571.6 4.7% 37.6%

Aberdeen Asset Managers, LTD (U.K.) United Kingdom Growth Low 103,290.5 6,390.3 559.0 6.2% 9.6%

Schroder Investment Management, LTD United Kingdom GARP Medium 130,917.9 6,566.8 472.6 5.0% 7.8%

BlackRock Investment Management (U.K.), LTD United Kingdom Growth Low 407,207.3 7,322.0 409.3 1.8% 5.9%

Waddell & Reed Investment Management Company United States Agg. Growth Medium 56,960.3 1,316.7 393.0 2.3% 42.5%

Investec Asset Management, LTD (U.K.) United Kingdom Growth Medium 49,673.0 3,161.2 366.1 6.4% 13.1%

Geode Capital Management, LLC P United States Index Low 340,961.4 3,038.9 295.4 0.9% 10.8%

BlackRock Advisors (U.K.), LTD P United Kingdom Index Low 152,766.7 6,546.7 292.6 4.3% 4.7%

Hermes Investment Management, LTD United Kingdom GARP Medium 15,074.9 1,823.7 283.3 12.1% 18.4%

Artisan Partners, L.P. United States Growth Medium 100,440.6 2,303.3 281.6 2.3% 13.9%

AllianceBernstein, L.P. (U.S.) United States Value Medium 168,858.3 2,720.4 251.9 1.6% 10.2%

Goldman Sachs Asset Management International United Kingdom Growth High 19,547.3 1,256.1 247.2 6.4% 24.5%

UBS Asset Management (U.K.), LTD United Kingdom Value Low 77,727.6 1,875.8 223.9 2.4% 13.6%

Capital Research Global Investors (U.S.) United States GARP Low 478,312.8 11,372.8 221.1 2.4% 2.0%

Swedbank Robur Fonder AB Sweden Growth Low 83,498.0 2,016.9 217.8 2.4% 12.1%

Charles Schwab Investment Management, Inc. P United States Index Low 162,084.2 2,610.5 196.8 1.6% 8.2%

Deutsche Asset Management (UK), LTD P United Kingdom Index Very High 20,649.1 261.4 194.0 1.3% 287.9%

Mirae Asset Global Investments (Hong Kong), LTD Hong Kong Agg. Growth Medium 3,814.3 1,426.8 189.9 37.4% 15.4%

163,440.4 10,079.2

Firm Country Style Turnover Equity Assets ($M) Value ($M) Change ($M) % Portfolio % Portfolio Chg

Capital World Investors (U.S.) United States Value Low 713,430.6 21,041.1 -1,762.3 2.9% -7.7%

OppenheimerFunds, Inc United States Growth Medium 167,975.0 6,864.5 -852.4 4.1% -11.0%

Dimensional Fund Advisors, L.P. (U.S.) P United States Value Low 429,964.6 13,871.2 -641.1 3.2% -4.4%

First State Investments International, LTD United Kingdom Growth Low 3,517.6 2,364.1 -624.9 67.2% -20.9%

First State Investments (Hong Kong), LTD Hong Kong Growth Low 10,237.8 5,021.7 -568.9 49.1% -10.2%

Carmignac Gestion France Growth Medium 22,011.8 511.5 -379.0 2.3% -42.6%

Morgan Stanley Investment Management Company (Singapore) Singapore Growth Medium 3,543.8 438.4 -311.9 12.4% -41.6%

J.P. Morgan Asset Management (UK), LTD United Kingdom Growth Medium 122,809.6 3,939.0 -267.2 3.2% -6.4%

FIL Investment Management (Hong Kong), LTD Hong Kong Growth Low 22,278.2 9,170.1 -251.9 41.2% -2.7%

Orbis Investment Management, LTD Bermuda Value Medium 29,384.8 442.2 -209.9 1.5% -32.2%

Templeton Asset Management, LTD Hong Kong Growth Low 12,930.3 4,059.1 -207.4 31.4% -4.9%

Vontobel Asset Management, Inc. (U.S.) United States Growth Low 28,429.3 1,036.2 -191.4 3.6% -15.6%

Baillie Gifford & Company, LTD United Kingdom Growth Low 148,971.6 4,468.8 -182.9 3.0% -3.9%

JF Asset Management, LTD Hong Kong Growth Medium 26,597.1 7,966.2 -181.4 30.0% -2.2%

TIAA-CREF Investment Management, LLC United States Growth Low 320,960.4 4,884.6 -175.9 1.5% -3.5%

RRJ Management (HK), LTD Hong Kong Growth Low 2,166.6 495.0 -157.7 22.8% -24.2%

Kames Capital PLC United Kingdom Growth Medium 23,111.4 786.8 -151.9 3.4% -16.2%

Pictet Asset Management S.A. Switzerland GARP Medium 75,519.8 2,682.4 -144.2 3.6% -5.1%

Jennison Associates, LLC United States Growth Medium 105,232.5 1,641.9 -131.4 1.6% -7.4%

Grantham Mayo Van Otterloo & Co., LLC United States Value Medium 39,148.3 2,910.3 -123.3 7.4% -4.1%

Includes Investors with EUM greater than $100M. 94,595.1 -7,517.1

SWF - Sovereign Wealth Fund; HF - Hedge Fund/Alternative; P - Passive Investor

TOP

HO

LDER

STO

P B

UYE

RS

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Flow of Funds: Hong Kong

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