Stand 30.11.2022 | Performance Review Emerging markets, including China, continued to rise in July. Positive sentiment drove stocks higher at the start of the month before government efforts to cool market exuberance and a US-China diplomatic row triggered some profit-taking. China s economy returned to growth in thesecond quarter. For the month, the fund s A (acc) USD shares returned 9,70%, and its benchmark, the MSCI China 10/40 Index-NR - Linked, returned 8,86%. ONE-MONTH KEY PERFORMANCE DRIVERS In July, language-schools and online tutoring business GSX Techedu contributed to relative returns. Its share price has seen a significant rally since the initial fallout from a negative report by a short seller. GSX Techedu s management team refuted the short-seller s analysis. FurtherCOVID-19 outbreaks, though well-contained, delayed school openings and may have enhanced demand for online tutoring. Liquor producer Luzhou Laojiao also made substantial progress. The company s share price advanced despite a state-influenced newspaper criticising a major competitor s product, linking it to use in cases of bribery and graft. The stock had been outpaced by its peers in recent months,so the move represented a relative catch-up, in our view. In contrast, biotechnology firm Innovent Biologics detracted over the month. The company announced a discounted share sale during July to raise funds for a new production facility. We continue to like the long-term fundamentals of this business, but the stock had performed well inrecent months, leaving it open to profit taking in July. Outlook & Strategy While some countries are struggling with a second or even third wave of COVID-19 transmissions, others are seeing containment and the gradual reopening of economies. Consensus suggests that a potential vaccine is at least 12 to 18 months away and, in the interim, countries willneed to start operating effectively again, whether from a health, social or governance perspective. The long-term and far-reaching economicconsequences of lockdowns will also become clearer and need to be managed. In addition to the health crisis, we have also seen increasing geopolitical risk, with the long-standing friction between China and the United States returning to the forefront. The nature of US-China relations has changed at both the political and economic levels. The US administration s viewof China as a rival superpower has brought about a different policy stance: the current administration is taking a sharper approach than before,which is likely to persist. The US presidential election ahead in November also has had a huge effect on the country s rhetoric, which will likelyremain heated as the election approaches. But once it has passed, and as a US economic recovery becomes clearer, we believe the toneshould improve. In our view, geopolitical headlines are unlikely to derail China from its path to recovery. Recent stimulus measures, including sizable fiscal spending, should provide positive catalysts to the domestic recovery in the nearer term, not least because the country appears to have effectivelymanaged the COVID-19 crisis so far, in our view. We believe this should stand China in good stead, relative to other countries, as and when thenegative economic impacts of the pandemic crisis dissipate globally. The government did not set an explicit growth target for China s economy for2020 due to the high level of uncertainty around the pandemic and global situation, but the country returned to annualised economic growth in thesecond quarter, following the first-quarter s contraction. Geopolitical risks are par for the course for emerging-market investors. While we continually factor these considerations into our investment decisions, of far greater importance are company fundamentals and earnings sustainability, as well as the irrefutable combination ofdemographics and long-term growth potential. Our priority remains long-term themes such as consumption, premiumisation, digitalisation, marketconsolidation, health care and technology.