On a monthly basis the Japanese Nikkei index went up by 2.7 percent in euro in December. The fund price of the Japan fund increased by 3.3 percent. The yen, which often serves as a proxy for the ... Read more
Intereffekt China Warrants is called Intereffekt Active Leverage China from 2 November 2015.
Intereffekt Active Leverage China invests in derivatives on the financial markets in China. The fund is aiming at a leverage of 2 to 3 times the return on the underlying values. Its investment policy will be aimed primarily at achieving capital growth (the fund will not pay any dividends). The risk profile is high, due to investments being channeled into derivatives and the emerging markets of China. The manager will not use a benchmark as a gauge for the purposes of determining investment policy or comparing the results achieved by the fund.
Intereffekt Active Leverage China is a subsidiary fund of Intereffekt Investment Funds N.V. (IIF), established with a so-called umbrella structure.
In the month of December the HSCEI index went down 4.0 percent in euro terms. The fund price fell 9.1 percent. The value of the Hong Kong dollar rose 0.5 percent. The trading model has generated several signals in December, so the leverage has been modified several times.
During the first trading day of the month the HSCEI index reached the level of 10,000 points, which also was the highest point of the month. From this level a decrease of 9 percent followed down to the level of 9,150 points, where a bottom was formed. The index recovered slightly, but on balance it was a bad month in China. Also, compared to other world indices the HSCEI index underperformed due to various causes.
For example, investors expect interest rates will rise in the US. The Fed has already fulfilled a part of this expectation on December 15, by raising rates with 25 basis points from 0.50 to 0.75 percent. In response, the HSCEI index fell nearly 3 percent. The fact that the HK dollar is pegged to the US dollar means that the interest rates will go up in Hong Kong. With the skyrocketing real estate prices in HK, it is the question to what extent this will have impact.
In addition, investors look to the weakening yuan that creates a flight of capital from the country. The Chinese currency has not fallen so hard for over 20 years in 2016. In the first ten months of 2016 nearly $ 700 billion in capital fled. The Chinese central bank only had $ 3.1 trillion in currency reserves in November, the lowest level in six years. Foreign investors and Chinese savers are worried about their assets and rather keep these out of China. For example, the 50% increase in 2016 of the Bitcoin is mainly due to Chinese who buy this digital currency.
However, the value of the yuan has also advantages. Exports from China grew slightly in November, for the first time after seven months of decline. In addition, the Chinese industry is also doing better. The purchasing managers index rose for December from 50.9 to 51.9. The figures point to a stabilization of the growth rate.
Market Monitor / Trading model
No rights may be derived from this publication. You are referred to the prospectus and Key Investor Information Document for the fund's terms and conditions. These documents may be obtained from the website or the address mentioned below. The manager of IIF has obtained a licence for this fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision.