Like most China-focused Investment Trusts, the JP Morgan China Growth and Income Trust has had a torrid 2022.
A global tightening cycle that’s seen the highest interest rates since before the financial crisis, and persistent lockdowns in China has rocked the sector.
Mainland and Hong Kong-listed Chinese equities sank and many of London’s China mandated trusts hits the lowest levels for years.
A deterioration in sentiment around the world’s second largest economy saw Trust discounts expand and they now appear attractive. The depressed share prices of the trusts add to their appeal.
Indeed, there are four or five trusts with very similar underlying holdings that have performed in a similar way this year and would fit the bill for anyone looking for a recovery in Chinese stocks.
JP Morgan China Growth and Income stands out due to outperformance of the benchmark over the past three years and a 5.8% yield, which surpasses peers.
The trust trades at a circa 5% discount to NAV which is roughly in the middle of the range of the trust’s historical premium and discount.
JP Morgan China Growth and Income Trust’s portfolio is more heavily weighted to Tencent than peers and doesn’t have Alibaba in its top ten holdings.
Chinese reopening
A Chinese reopening will see a high level of correlation among China-focused Investment Trusts but should the much anticipated resumption of normal economic activities be delayed, the JP Morgan China Growth and Income dividend will pay investors a handsome dividend for the wait.