1、Annual Report 31 October 2022abrdn China Investment Company LimitedSeeking long-term capital growth by investing predominantly in Chinese equitiesVisit our WebsiteTo find out more about abrdn China Investment Company Limited,please visit abrdnchina.co.ukabrdn Investment TrustsabrdnTrustsTHIS DOCUMEN
2、T IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.If you are in any doubt about the action you should take,you are recommended to seek your own financial advice from your stockbroker,bank manager,solicitor,accountant or other financial adviser authorised under the Financial Services and Markets A
3、ct 2000(as amended by the Financial Services Act 2012)if you are in the United Kingdom or,if not,from another appropriately authorised financial adviser.If you have sold or otherwise transferred all your Ordinary shares in abrdn China Investment Company Limited,please forward this document,together
4、with the accompanying documents immediately to the purchaser or transferee,or to the stockbroker,bank or agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.1abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial St
5、atementsCorporate Informationabrdn China Investment Company Limited is a closed-end investment company with its Ordinary shares listed on the Premium Segment of the London Stock Exchange.The Companys name,objective and investment policy were changed following approval by shareholders at an Extraordi
6、nary General Meeting on 26 October 2021,and in November 2021 the Company completed its combination with Aberdeen New Thai Investment Trust PLC.The Company seeks to produce long-term capital growth by investing predominantly in Chinese equities.ContentsOverview Financial Information 02 Financial Cale
7、ndar 03 Chairmans Statement 04Strategic Report Investment Managers Report 09 ESG Highlights for the Company 12 Information about the Manager,Investment Manager and Investment Management Team 16Portfolio Ten Largest Investments 18 Investment Portfolio 19Governance Directors Report 22 Corporate Govern
8、ance Statement 30 Promoting the Success of the Company 39 Report of the Audit Committee 42 Directors Remuneration Report 44 Statement of Directors Responsibilities 46 Depositary Report 47Financial Statements Independent Auditors Report 49 Statement of Comprehensive Income 53 Statement of Financial P
9、osition 54 Statement of Changes in Equity 55 Statement of Cash Flows 56 Notes to the Financial Statements 57Corporate Information(unaudited)Alternative Performance Measures(“APMs”)(unaudited)79 Investor Information 81 AIFMD Disclosures(unaudited)84 Glossary of Terms and Definitions 85 Notice of Annu
10、al General Meeting 87 Form of Proxy 92 Company Information 942Annual Report 2022Financial Information Financial Position as at 31 October 2022NAV per Ordinary share2Ordinary share price mid market Discount3512.0p448.0p 12.5%2021 813.2p2021 695.0p2021 14.5%Net AssetsGearing-Net(cash)/debt3Dividend yi
11、eld231.8m-3.6%0.7%2021 373.8m2021-70.0%2021 2.5%Performance for the Financial Year ended 31 October 2022Net asset value(“NAV”)per Ordinary share total return1,3,4Ordinary share price total return1,3,4MSCI China All Shares Index Net Total Return in sterling terms-37.0%-35.5%-31.5%2021 19.8%2021 18.7%
12、2021 10.7%Revenue return per Ordinary share Ongoing charges ratio(OCR)3Dividend per Ordinary share declared in respect of the Financial Year4.0p0.60%3.2p2021-0.61p2021 0.98%2021 17.25p1 Performance figures stated above include reinvestment of dividends on the ex-date.2 See note 14 in the Notes to th
13、ese Financial Statements for basis of calculation.3 Definitions of these Alternative Performance Measures(APMs)together with how these have been calculated can be found on pages 79 and 80.4 The Companys 2021 performance was attributable to the fund being managed in accordance with its previous inves
14、tment objective,which was to achieve consistent returns for shareholders in excess of the MSCI Emerging Markets Net Total Return Index in sterling terms and the new investment objective,following approval by shareholders at the EGM on 26 October 2021,which is to produce long-term capital growth by i
15、nvesting predominantly in Chinese equities.NAV per ordinary shareAt 31 October penceOrdinary share pricemid marketAt 31 October pence010020030040050060070080090020222021202020192018600.6p663.3p512.0p813.2p698.3p010020030040050060070080020222021202020192018515.0p561.0p448.0p605.0p695.0p3abrdn China I
16、nvestment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationFinancial CalendarFinancial CalendarOnline Shareholder Presentation30 March 2023Annual General Meeting(AGM”)(London)13 April 2023Half year end30 April 2023Announcement of Half-Yearly Financia
17、l Report for the six months ending 30 April 2023June 2023Financial year end31 October 2023Announcement of Annual Report and Accounts for the year ending 31 October 2023January/February 2024“October 2022 marked the first anniversary of our shareholders approving the Companys change of mandate,shiftin
18、g from investing in a wide range of emerging market funds to concentrating on the compelling opportunities offered by Chinese equities.While this first Financial Year has seen some extremely challenging conditions,the Board believes that the long-term growth prospects for Chinese companies,which dro
19、ve our proposal to change the Companys mandate,remain as compelling as ever.The performance of the portfolio and Chinese equity markets since the end of the Financial Year would appear to bear this out.”Helen Green,Chairman4Annual Report 2022Helen GreenChairmanChairmans StatementOverviewIt is my ple
20、asure to report to you for the first time as Chairman of the Board in what has been a hugely significant financial year to 31 October 2022(the“Financial Year”)for abrdn China Investment Company Limited(“the Company”or“ACIC”).October 2022 marked the first anniversary of our shareholders approving the
21、 Companys change of mandate,shifting from investing in a wide range of emerging market funds to concentrating on the compelling opportunities offered by Chinese equities.While this first Financial Year has seen some extremely challenging conditions,the Board believes that the long-term growth prospe
22、cts for Chinese companies,which drove our proposal to change the Companys mandate,remain as compelling as ever.The performance of the portfolio and Chinese equity markets since the end of the Financial Year would appear to bear this out.In his last report to shareholders,my predecessor,Mark Hadsley-
23、Chaplin who retired on 1 August 2022,commented that investors in Chinese equities were largely ignoring company fundamentals,with share prices being heavily influenced by macroeconomic and geopolitical risks.This trend continued during the Financial Year and led to a general rotation from growth to
24、value stocks,forcing share prices downwards.The Companys net asset value(NAV)total return for the Financial Year was-37.0%,while the share price total return was-35.5%.This compares with the total return of the MSCI China All Shares Index of-31.5%in Sterling terms.However,since the end of the Financ
25、ial Year,the China re-opening trade has been positive and markets have rallied significantly.There were a number of macro geopolitical and economic factors which had a significant negative influence on the performance of Chinese equities during the Financial Year war in Ukraine,an energy crisis,soar
26、ing commodity prices and global inflation,which led to rising interest rates and fears of a worldwide recession.The ongoing tensions with the US,and the performance of the US dollar,compounded the challenges for Chinese equities.Markets continue to be extremely sensitive to any flare-ups between the
27、 two economic superpowers.Consequently,verbal sparring over Taiwan,the delisting of Chinese American Depositary Receipts(ADRs)and potential sanctions(such as the Biden administrations block on sales of American semiconductors to China announced in October)all added to volatility in Chinese stock mar
28、kets.Locally,three major domestic factors negatively affected share prices during the Financial Year:firstly,Chinas continued commitment to its zero-Covid policy,which limited the reopening of the local economy;secondly,the travails of the countrys heavily indebted real estate sector;and,thirdly,rea
29、ction to General Secretary Xi Jinping securing an unprecedented third term as Chinas leader at the 20th Communist Party Congress.The Companys underperformance during the Financial Year should be considered against the challenging market backdrop.ACICs lack of exposure to energy companies hindered pe
30、rformance.Energy was the only sector at a market level to rise during the Financial Year,led by the surge in oil and gas prices.However,with the Chinese energy sector dominated by state-owned oil and gas companies,ACICs Investment Manager believes it is difficult to find quality companies in this se
31、ctor that will perform well over the long-term.Stock selection in the financial sector also weighed on returns,as a number of the Companys bank holdings underperformed.On a brighter note,there was positive news from some of ACICs consumer holdings,which benefited from increased consumption of domest
32、ic brands over imported goods.ACICs Investment Manager responded to the challenging conditions during the Financial Year to mitigate short-term volatility.One such step was to reduce the underweight gap in value stocks,as the market style rotated from growth to value,adding to our holdings in more d
33、efensive sectors,while still maintaining exposure to the portfolios five core themes:aspiration,digitalisation,going green,health and wealth.These are set out in more detail in the Investment Managers Report,along with additional commentary on portfolio performance and activity.DividendsDuring the F
34、inancial Year,the Board revised ACICs dividend policy so that a sufficient proportion of income delivered by the portfolio is paid out in dividends to Shareholders,thus enabling the Company to maintain its investment trust status.At the end of the Financial Year,the revenue and profitability of the
35、Company was such that the Board is declaring an interim dividend in respect of the Financial Year ended 31 October 2022 of 3.2p per Ordinary share which will be payable to Shareholders on 17 March 2023 with an associated ex-dividend date of 23 February 2023.Loan Facility and GearingOn 13 April 2022,
36、the Company signed an agreement with the Industrial and Commercial Bank of China(ICBC)for a5abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate Informationnew two year revolving credit facility.The facility provides ACIC with 15 million of b
37、orrowings,along with an option to increase the level of the commitment by a further 15 million,drawable in Sterling or Chinese Yuan.At the Financial Year end the facility was unused.However in December 2022 and late January 2023,the Investment Manager drew down CNH 106m(12.7m)in two tranches.These f
38、unds provide the investment team with additional capacity to purchase quality,high conviction target companies and to fund investment in markets to which the Company gained access as part of its Qualified Foreign Investor licence.Discount and buy backsDuring the Financial Year,the Board closely moni
39、tored the Companys share price discount to NAV.The Boards intention is that ACICs shares should not trade at a price which,on average,represents a discount that is out of line with its direct peer group over the long-term.The Board seeks authority from Shareholders annually to buy back shares to ass
40、ist the management of the discount.Shares may be repurchased when,in the opinion of the Board,and taking into account factors such as market conditions and the discounts of comparable companies,the Companys discount is out of line with ACICs direct peers and shares are available to purchase in the m
41、arket.The Board believes that the principal purpose of share repurchases is to enhance the NAV for remaining shareholders,although it may also assist in addressing the imbalance between the supply of and demand ACICs shares and thereby reduce the scale and volatility of the discount at which the sha
42、res trade in relation to the underlying NAV.At the beginning of the Financial Year,and as part of the merger with Aberdeen New Thai Investment Trust plc(New Thai),the Company invited all shareholders to participate in a tender offer pursuant to which the Company would buy back up to 15%of the Ordina
43、ry shares in issue at a 2%discount to NAV.Shareholders tendered 6,894,773 Ordinary shares in response to the offer and the Company bought back those shares into treasury at a price of 801.92p per share.Simultaneously,the Company issued 7,554,440 new Ordinary shares to the shareholders of New Thai wh
44、o had elected to roll their shareholding into ACIC.Following the completion of the Scheme of Arrangement on 9 November 2021,the number of Ordinary shares in issue was 46,624,826.Between 9 November 2021 and 31 October 2022,ACIC bought back 1,341,251 shares or 2.9%of the share capital in issue at a co
45、st of 7.55 million and a weighted average discount of 12.6%.This enhanced the Companys NAV by 0.35%.Since the Financial Year end,the Company has bought back a further 1,268,709 shares or 2.8%of the share capital in issue at the Financial Year end at a cost of 7.0 million and a weighted average disco
46、unt of 14.4%.This enhanced the Companys NAV by 0.4%.Investment Trust statusFollowing the merger with New Thai,the Board was pleased to announce that ACIC had been granted approval by HMRC to be classified as an investment trust under Chapter 4 of Part 24 CTA 2010 and Chapter 1 of Part 2 of The Inves
47、tment Trust Tax Regulations.As a result,the Company became an investment trust with effect from 9 November 2021 and is registered in the United Kingdom for tax purposes.This means that,in respect of each accounting period for which ACIC is approved by HMRC as an investment trust,ACIC will be exempt
48、from UK taxation on its chargeable gains.Income arising from overseas investments is subject to foreign withholding taxes at varying rates,however,like other investment trusts,the Company seeks to make use of double taxation relief where available.The Company is still liable to pay UK corporation ta
49、x on its net income in the normal way but should,in practice,be exempt from UK corporation tax on dividend income received,provided that such dividends(whether from UK or non-UK companies)fall within one of the“exempt classes”in Part 9A of the Corporation Tax Act 2009.Qualified Foreign Investor appr
50、ovalOn 19 December 2022,ACIC announced that it had completed the process and had received regulatory approval for a Qualified Foreign Investor(“QFI”)licence.The QFI scheme provides the Company with access to a broader investible universe of Chinese equities,including access to stocks listed on the S
51、hanghai Stock Exchange STAR Market(“STAR”),and at the same time grants the Company more flexibility to trade onshore equities approaching Foreign Ownership Limits under the Stock Connect programme.Management TeamFollowing the change of the Companys investment mandate,Nicholas Yeo and Elizabeth Kwik
52、were appointed to lead ACICs Investment Management Team on 26 October 2021.They manage ACICs portfolio from Hong Kong and Shanghai,where the 13 strong Chinese equities team is based.The Board met members of the team,virtually,prior to appointment and was impressed by them and their track record.6Ann
53、ual Report 2022On the change of the Companys investment mandate,Bernard Moody and Andrew Lister ceased to be involved in the day-to-day running of the portfolio.On behalf of the Board,Iwould like to thank Bernard,Andrew and the abrdn Closed End Fund Strategies team who have done an excellent job of
54、managing the Companys portfolio.The change of mandate and management team was not in any way a reflection of the service that they provided,and the Board and I wish them the very best.Change of Company Secretary,Administrator,Depositary and CustodianFollowing the end of the Financial Year,ACIC has s
55、igned agreements with abrdn plc and various entities within BNP Paribas S.A.(“BNPP”)to take on various functions in due course.BNPP will become ACICs administrator and provide custody and depositary services.abrdn will take on Company Secretarial responsibilities.An announcement will be made when th
56、e transfer process has been completed.Board CompositionThere have been some significant changes to the Board during the Financial Year.Anne Gilding and Sarah MacAulay joined the Board as Directors in November 2021,both of whom had previously been directors of New Thai.William Collins retired as a Di
57、rector of the Company on 12 April 2022,having served on the Board for ten years,and Mark Hadsley-Chaplin retired as Chairman and a Director on 1August 2022,having served for more than nine years.On behalf of the Board,I would like to record my thanks to them both,and particularly Mark for his effort
58、s in steering the Company through its change of mandate.I was honoured to be asked by my other Board colleagues to assume the role of Chairman on 1 August 2022 when the Board also appointed Sarah MacAulay as Senior Independent Director.Lastly,the Board welcomed Mark Bridgeman to the Board on 1August
59、 2022 and as my successor as Chairman of the Audit Committee.Mark brings a wealth of experience in the investment sector.He will stand for election to the Board at the AGM in April 2023.ACICs Board takes its responsibilities very seriously,and regularly considers succession planning,and I am delight
60、ed to be working with the refreshed Board and look forward to building upon our successes.The Board is developing plans to visit China,and the investment team in 2023,and I hope to be able to report on a successful trip in the next Annual Report.Online Investor PresentationIn order to encourage as m
61、uch interaction as possible with our shareholders,I will be hosting an Online Investor Presentation at 11:00am on Thursday,30 March 2023.At this event,there will also be an update from Elizabeth Kwik,Portfolio Manager,followed by an opportunity to ask live questions of Elizabeth and me.The online pr
62、esentation is being held ahead of the AGM to allow shareholder sufficient time to submit their proxy votes after the presentation but prior to the AGM should they so wish.Full details on how to register for the online event can be found on ACICs website abrdnchina.co.uk.Annual General Meeting(“AGM”)
63、The Companys AGM will be held at 12 noon on 13 April 2023 at Wallacespace Spitalfields,15-25 Artillery Lane,London,E1 7HA.The Board is delighted that Elizabeth Kwik will be travelling from Hong Kong to present an update on ACIC and meet with shareholders in person at the AGM and we encourage shareho
64、lders to attend.In advance of the AGM,we would request that you complete and return the proxy form enclosed with the Annual Report so as to ensure that your votes are represented at the meeting.Ifyou hold your shares in the Company via a share plan or a platform and would like to attend and/or vote
65、at the AGM,you will need to make arrangements with the administrator of your share plan or platform.For this purpose,investors who hold their shares in the Company via the abrdn Investments Plan for Children,Share Plan or ISA will find a Letter of Direction enclosed.Shareholders are encouraged to co
66、mplete and return the Letter of Direction in accordance with the instructions.The Notice of the Meeting is contained on pages 87 to 92.OutlookThe last 12 months have been particularly challenging for investors in Chinese equities.We saw the Hang Seng Index in Hong Kong bottom out below 15,000,touchi
67、ng levels not seen since the aftermath of the Global Financial Crisis in 2008.Markets reacted positively to the announcements of the easing Chairmans Statement Continued7abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate Informationof Covid
68、 restrictions in China to the point where the NAV Total Return of the Company in the first three months of the current financial year was almost 40%.This is,admittedly,following the heavily negative numbers,but it does highlight how much interest there is in China,interest that we believe is well-fo
69、unded.The Board remains confident that any short-term headwinds that we may encounter in future will be strongly outweighed by long-term positive fundamentals and the compelling opportunities to invest in quality Chinese companies.We consider that the actions that the Chinese government has taken in
70、 the last three months should not be seen as temporary and that,even if the uptick in domestic travel over Chinese New Year does lead to an increase in the number of people falling ill,there is little appetite for further draconian lockdowns such as we witnessed in late 2022,culminating in the tragi
71、c fire in Xinjiang.The return to the long-term trends of rising levels of urbanisation and the increase in the disposable incomes that the ever-expanding middle classes are able to deploy provides a ready market for high-quality goods and services.The Board believes the portfolio is well positioned
72、to capture Chinas long-term growth potential and is pleased to note the recent performance of the Chinese equities market since the end of the Financial Year.With a focus on these core themes,ACICs Board believes that the portfolio comprises high-quality companies representing the finest structural
73、growth opportunities in China,and arguably some of the most attractive areas of growth available anywhere to investors.Helen GreenChairman 13 February 20238Annual Report 2022Strategic ReportWe see the brightest future for companies able to adapt to changing regulatory frameworks and align with polic
74、y objectives in areas such as digital innovation,green technology,access to affordable healthcare and improved livelihoods.We are focused on these themes that we believe will drive returns in 2023 and beyond.Strategic Report8Annual Report 20229abrdn China Investment Company LimitedOverviewStrategic
75、ReportPortfolioGovernanceFinancial StatementsCorporate InformationMarket EnvironmentAt the start of the Financial Year,optimism towards Chinese stock markets was high.Facing rising inflation,Western economies were entering a tougher policy environment likely to hamper progress in their stock markets
76、.Meanwhile,China stood out as a potential counter-cyclical recovery play,supported by the countrys modest stock market valuations,low inflation rate and expansionary monetary policy.Unfortunately,this optimism was not matched by the subsequent reality:the Companys Reference Index,the MSCI China All
77、Shares Index,fell 31.5%in sterling terms over the Financial Year.Chinese stock markets endured an arduous period in what also proved to be a turbulent time for global financial markets and the world economy.However,unlike the major Western economies,buffeted by inflation and rising interest rates,Ch
78、ina experienced a mixture of specific domestic and external challenges that caused its economy to stumble and its stock markets to fall heavily.These pressures were compounded by the difficult global economic backdrop.Central to the countrys domestic challenges was the Chinese governments zero-Covid
79、 policy.This strict approach to containment of the Covid-19 virus proved economically disruptive,as major cities were locked down to stop the spread of the virus.Recent months have seen an easing of restrictions and,crucially,increased efforts to boost vaccination rates and hospital capacity that sh
80、ould allow the country to start to reopen.At the time of writing,they have flocked to major airports,train stations and highways during the Lunar New Year holidays.We expect a multi-stage recovery in China where domestic consumption normalisation has a long runway ahead,supported by excess savings a
81、mong households and depressed valuations.Another domestic headwind came in the form of a slowdown in Chinas large and highly indebted property sector.The Chinese governments plans to reduce debt in the real estate sector should be positive in the long-term,resulting in a sector that is better regula
82、ted and less burdened by borrowing.The government is aware of the contagion risk from the real estate sector and has been providing liquidity to the property sector through targeted measures,while still having the overarching objective of reducing the sectors excessive leverage.Nevertheless,the shor
83、t-term reaction including the refusal of some citizens to pay their mortgages on properties they feared may never be built was,at times,dramatic.The real estate crisis had a knock-on effect across sectors during the Financial Year,particularly affecting banks,which have a large proportion of mortgag
84、es on their books.Some of the Companys bank holdings were among the worst detractors over the period.Furthermore,regulatory tightening in the technology and e-commerce sectors also hindered performance during the Financial Year.Geopolitics also played a role in the countrys weak stock market perform
85、ance.Tensions with the US over key technologies and Taiwan,including a contentious visit by the US Speaker of the House of Representatives that saw China react with high-profile military drills,added to the list of issues facing Chinese investors.Towards the end of the Financial Year,Chinese stock m
86、arkets fell further after investors were disappointed by the outcome of Octobers 20th Communist Party Congress.Markets reacted warily to the strengthening of President Xis position after his re-election,although they have since responded positively following the weakening of the previously announced
87、 continuation of the zero-Covid strategy.Investment ThemesIn constructing and managing the Companys portfolio,we employ a five-pronged thematic approach to identifying companies which we believe will deliver superior returns over the long-term.While this approach will not prevent us from buying into
88、 a position where we see fundamental value,we would expect most of the holdings to benefit from one of the themes below:Aspiration:We expect consumer companies to fare well as China strives for a self-sufficient economic model.Premiumisation positioning goods and services as high-quality,in part to
89、gain pricing power is an ugly word but a powerful consumer trend.We believe urbanisation and rising middle-class wealth will drive demand for premium goods and services in the long-run.Digital:This theme is aligned with the governments objectives of localisation,improving productivity,lowering costs
90、,increasing innovation and helping to propel economic growth.Our holdings in this segment are primarily software-related names.Chinese companies have historically performed strongly given their knowledge of the domestic market and preference for localisation in areas such as cybersecurity and cloud
91、services.Green:This theme is set to benefit from government policy ondecarbonisation and net-zero emissions by 2060.China dominates global manufacturing capacity for renewable energy and storage,accounting for 90%of solar and 75%of Investment Managers ReportElizabeth KwikNicholas Yeo10Annual Report
92、2022Investment Managers Report Continuedbattery capacity and is well positioned to benefit from the huge global investment required in renewable energy and electricity storage.Other industries also need to decarbonise,so we expect greater investment in upgrading machinery and increasing energy effic
93、iency.Our holdings include solar wafer-producers,component-makers,battery and related component-makers and automation-related firms.Health:This theme aligns with government policy objectives to make healthcare cheaper and more accessible.This is particularly relevant in view of Chinas rapidly ageing
94、 society.We are overweight in healthcare services,including companies providing innovative research and clinical trial services that seek to bring high-quality therapies to market.Wealth:This theme aligns with the governments objective of China becoming a moderately prosperous society by 2035.The fi
95、nancial services sector plays a key role in creating and protecting wealth.Our holdings contribute to the creation of strong financial and capital markets,and also include software companies that support the development of capital markets,such as trading and portfolio management.The adoption of insu
96、rance services remains low in China relative to the rest of the world.We see a large potential market in terms of life and health insurance,especially given Chinas ageing population.Portfolio PerformanceDuring the Financial Year,the Companys net asset value(“NAV”)total return was-37.0%,underperformi
97、ng the total return of the Reference Index.The Ordinary share price total return was-35.5%,as the discount to NAV at which the Companys shares trade narrowed to 12.5%from 14.5%at the start of the Financial Year.The Companys shares are trading at an 13.5%discount at the time of writing.In terms of br
98、oad headwinds for the portfolio,it was a year when macroeconomic and geopolitical concerns trumped bottom-up stock fundamentals.The many positive developments at the individual company level within the portfolio were often largely ignored by investors who were more concerned about bigger economic th
99、emes or threats.A rotation in investment style factors,which saw value stocks favoured over growth stocks,also posed a challenge.The Companys NAV underperformance during the Financial Year was largely driven by stock selection.Sector allocation effects were broadly neutral,although the portfolios la
100、ck of exposure to the strong-performing energy sector was a detractor to performance.We find few quality stocks in a sector dominated by state-owned enterprises that we do not view as long-term structural winners.We own many renewable energy-related companies in the portfolio,but these are classifie
101、d within the industrials sector.Stock picking within financials accounted for almost half of overall underperformance,with banks being a particular area of weakness.Stock selection was also negative in the healthcare,and materials sectors,although our stock choices in information technology and cons
102、umer staples contributed positively to overall returns.China Merchants Bank(CMB)was the portfolios worst performing stock which suffered due to its property exposure,soft consumer confidence and an unexpected change in senior management.In the consumer discretionary sector,China MeiDong Auto,a vehic
103、le dealer,struggled against a backdrop of subdued global demand for high-end cars.Elsewhere,CIFI Ever Sunshine,a property management company,was affected by the broader weakness in the property sector.We exited the stock during the Financial Year.On a brighter note,Proya Cosmetics(see case study on
104、page 14)was a strong contributor to performance.It grew its business over the Financial Year,navigating lockdown effects and expanding in cities considered to be“lower-tier”in the unofficial hierarchical classification of Chinese cities.Owning medical equipment-maker Shenzhen Mindray was also helpfu
105、l.Chinas difficulties in dealing with the Covid-19 pandemic have highlighted the need to invest in domestic healthcare.Shenzhen Mindray also benefited from expectations of easing Covid-19 restrictions.Lastly,China Tourism Group Duty Free,the travel retailer,recovered in line with the easing of the b
106、urdensome international travel requirements in China.Portfolio ActivityOur commitment to rigour in our investment process assumed even greater importance given the volatile market conditions and an uncertain economic environment.We mitigated short-term volatility at the portfolio level by adding to
107、defensive sectors such as consumer staples and lowering active exposure to the healthcare,technology and renewable energy sectors.We initiated a position in Inner Mongolia Yili,the dairy products producer,for its defensive fundamental characteristics.We also established a holding in Anhui Conch Ceme
108、nt,the largest cement manufacturer in China,to increase the portfolios 11abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate Informationexposure to infrastructure.In August,we participated in the Hong Kong IPO of China Tourism Group Duty Fre
109、e.Its shares were listed at an attractive discount and we believe the companys long-term outlook is positive.Elsewhere,we continued to increase our position in Aier Eye Hospital Group,the provider of ophthalmology medical services,to reflect our preference for medical services companies within the h
110、ealthcare sector.We exited China Conch Venture,the construction engineering company,and its spin-off entity,China Conch Environment Protection,companies principally engaged in the provision of environmental protection services due to worsening competition dynamics and concern over the companies fund
111、ing capability.In September,we sold out of our position in surgical robot company Shanghai Microport Medbot due to increased regulatory risks that did not align with our original expectations.We calculate that the average top line revenue growth of the companies in the portfolio during the Financial
112、 Year was 18%year-on-year(“yoy”).This growth was mainly driven by our holdings in the“Green”theme,which are expected to register an average of 61%yoy growth due to favourable government policies and accelerated developments throughout the industry.The“Health&Wellness”theme also performed well,with r
113、evenue growth of 22%yoy.Our“Aspiration”,“Digital”and“Wealth”themes performed less well,being negatively affected by Covid,delivering 12%,12%and 2%yoy revenue growth respectively.Earnings growth for the portfolio is largely in-line with revenue growth.Looking ahead,we expect top line revenue to recov
114、er.Growth of Green investments is predicted to normalise from a high base this year,while growth from companies representing Aspiration,Wealth and Digital themes should gradually pick up as Covid subsides and the Chinese economy recovers post reopening.Earnings growth for the portfolio is expected t
115、o rebound to 65%yoy next year.Three Year Earnings Compound Annual Growth Rate(“CAGR”)for holdings in the portfolio remains solid at 35%on average.OutlookWhile it is still early for the Chinese economy to show strong signs of recovery,we are positive on the outlook in 2023 for several reasons.Firstly
116、,stimulus measures have been working their way through the system since the start of the second half of 2022.Furthermore,we believe macro policy is likely to remain largely accommodative,with more legroom to support growth due to relatively low levels of inflation pressures that remain well containe
117、d.Secondly,recent measures to ease Covid restrictions have come at an accelerated pace that has taken everyone by surprise and this is a positive development for markets.It reflects the Governments concerns over the state of the economy as a result of its zero-Covid strategy.While the pivot may not
118、seem gradual by international standards at the time of writing,there are still restrictions such as the need for a PCR test before entering China and,more importantly,the mandate requiring everyone to continue to wear masks.Like other Asian countries,we think the reopening will be bumpy with infecti
119、ons peaking in different phases,starting with cities before moving to rural areas.Additionally the troubled property sector now appears to be well-supported,including a raft of liquidity support measures announced in recent months.This indicates that the central Government is well aware of the econo
120、mic headwinds facing China and is prepared to intervene and protect the growth trajectory.Chinese companies have thus far demonstrated strong fundamentals,with earnings growth of around 20%,despite an extremely challenging environment in the Chinese equities markets for most of the Financial Year.Va
121、luations also remain undemanding due to investor sentiment.We believe a combination of favourable earnings and supportive policies in 2023 will help improve international investor sentiment towards China.Given the rapid pace of reopening,inevitably,the number of deaths from Covid will rise,but it is
122、 a price the Government judges as not being high enough to offset the benefits of abandoning its zero-Covid strategy.However,the direction of travel for China is still one of reopening and economic recovery.To that end,we believe there is strong long-term potential in our five portfolio themes:aspir
123、ation,digital,green,health and wealth.That said,the long-term growth trajectory also faces some headwinds,including supply chain diversification away from China and restricted access to advanced US technologies.This is where we believe our bottom-up stock-picking approach,grounded in fundamental res
124、earch and local expertise,provides an advantage in finding the best quality companies in which to invest.Nicholas Yeo and Elizabeth Kwik abrdn Hong Kong Limited 13 February 202312Annual Report 2022ESG Highlights for the CompanyThe Investment Manager has been actively integrating Environmental Social
125、 and Governance(“ESG”)into its investment decision-making process for 30 years and believes that ESG factors are financially material,and can materially affect a companys performance Our Investment Manager has ESG resources and expertise in China,Hong Kong and Singapore.This enables our Investment M
126、anager to glean insights from company visits,have a deep understanding of the relevant government policy developments and obtain an ESG information advantage The Companys portfolio is ESG BBB rated by MSCI.This is higher than the benchmark rating of BB.The Companys carbon footprint is 52.8%lower tha
127、n its benchmark.Our Approach to ESGAlthough ESG factors are not the over-riding criteria in relation to the investment decisions taken by our Investment Manager,significant emphasis is placed on ESG and climate-related factors throughout the Companys investment process.The Board believes that a full
128、 and thorough assessment of ESG factors will result in better investment decisions to be made.ESG factors are considered by our investment manager,alongside financial and other fundamental factors,in order to make the best possible investment decisions at a stock picking and at a portfolio construct
129、ion level.Our approach to due diligence and research,coupled with third party provided research(including MSCI and abrdns in-house ESG rating tools),enables us to identify ESG leaders and laggards.Our Investment Manager has a close relationship with the ESG specialists within abrdn.The type of ESG r
130、esearch and analysis required in China is deeper and more nuanced than for many other markets.There are two components to this:.1.At the macroeconomic level,our Investment Manager works closely with the abrdn Research Institute to understand and contextualise economic,political and regulatory develo
131、pments.Government policy objectives in China focus on areas such as social,economic and financial stability,climate change and national security.However,within these broader policy objectives,more granular objectives have emerged.These include protecting 1 For more on the link between ESG and perfor
132、mance,see:https:/ data,tackling monopolistic practices and ensuring basic labour rights.These policy initiatives translate into investment insights.Companies that do not adapt to the developing policy focus may face a challenged outlook.As investors,understanding policy direction is key to assessing
133、 investment opportunities.2.At the stock level,our Investment Manager works closely with abrdns Central ESG Investment Function a team of more than 20 ESG experts to identify and understand material ESG risks and opportunities.This process focuses on rigorous due diligence and ESG analysis,coupled w
134、ith ongoing engagement and dialogue,which helps our Investment Manager to identify and invest in companies with strong ESG standards.This process is research-intensive and requires a strong on-the-ground presence.However,our Investment Manager also believes that this attention is an important contri
135、butor to alpha generation,encouraging and investing in positive change at companies.Progressive ESG policies should drive a companys financial performance and share prices over the long-term.1 External research agencies primarily use backward looking data to create ESG ratings and in doing so form t
136、he market view of a companys ESG credentials.Through our Investment Managers fundamental research,the team forms a forward-looking view of companies ESG credentials.ACIC does not exclude any sectors from its investment universe but all investments must pass a quality test and ESG issues are only par
137、t of the investment analysis.In addition,our Investment Manager undertakes engagement initiatives with,well-managed and well-capitalised companies which may not necessarily immediately be considered ESG leaders.Our Investment Manager seeks to effect change and develop best ESG practice through these
138、 engagement activities,which often run over several years.Progressive,well-managed companies are usually open to engagement and expert advice.ESG Considerations in ChinaThere is a growing appreciation from many Chinese companies of the value that attention to ESG factors can bring.Standards are evol
139、ving,disclosure is improving,and regulations(and enforcement of those regulations)around some social and environmental behaviours are stronger than 13abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate Informationin the past.Importantly,dial
140、ogue between companies and investors has improved significantly over the last five to ten years.More Chinese companies are outlining their thinking on sustainability,aspirations to reduce their carbon footprints,and the frameworks they have in place to negate ESG-related risks.There has been tangibl
141、e progress,including improvements in corporate governance,formalised dividend payout policies,improved transparency in reporting,and much-improved shareholder engagement.These improvements have,in many cases,come as a result of sustained engagement and dialogue between long-term investors and compan
142、ies.Set out below are some of the most pressing ESG issues we consider when investing in Chinese companies and how we respond to them:1.State control and state-owned enterprisesOne misconception often held about China is that its economy is dominated by state-owned enterprises(SOEs).The reality is m
143、ore nuanced.In the early days of the Chinese economic growth story SOEs did indeed dominate the economy(and hence stock markets).They were typically involved in heavier industries,including iron and steel,oil and gas.However,over time the balance has tilted towards private/entrepreneur-owned compani
144、es.SOE reform in the late 1990s and early 2000s saw a reduction in the number of SOEs coupled with a decline in their share of economic activity,and a formalisation of the governance structure of these SOEs.Many of the remaining SOEs underwent reform,putting in place governance structures and manage
145、ment processes more familiar to investors in listed companies Not all SOES are the sameIts important to recognise that not all SOEs are the same in terms of market orientation.Our Investment Managers deep due diligence focuses on the structure of SOE ownership(which government entity owns the SOE an
146、d whether its a regional or central organisation);the degree to which an SOEs strategy might be influenced or driven by government policy;strategies considered by management and how they have been executed;and remuneration or incentive schemes that are in place.Understanding the difference in qualit
147、y of these companies requires deep due diligence and engagement with their boards and managers.2.Related-party transactionsShare ownership in China can be concentrated.In addition,controlling shareholders often have multiple private and public interests.Complex ownership structures present challenge
148、s for investors.Perhaps the most difficult of these involve related-party transactions.These are transactions between a listed company and another connected party such as shareholders,directors,sister companies,suppliers,or a range of other potential parties.There are very clear conflicts of interes
149、t here,and a risk that value is tunnelled out of the listed company.This could be through mispricing on transactions,the provision of financial guarantees(or broader financial services),or the deprivation of business opportunities.However,related party transactions are also part of the normal course
150、 of business in China.As investors,we need to be aware of the risks,and how best to manage them.This can involve identifying which transactions are a normal course of business,and which have the potential to be abusive and potentially negative to the long-term prospects of that company.How our Inves
151、tment Managers Due Diligence process helpsOur Investment Managers due diligence process always starts with the controlling shareholder in order to ascertain how their interests align with ACICs interests as a minority shareholder.Our Investment Manager checks the controlling shareholders background
152、to understand the alignment of interests,what connections they retain to privately held vehicles,and the way these interests may compete.Attention is also given to the board and management team and their competence,character,and commitment and,ultimately,whether the management team meets the quality
153、 hurdle.Our Investment Manager also examines transactions in detail to understand rationale and pricing and whether a transaction is in the normal course of business,why a particular counter-party was sought,and how pricing was determined.This is laborious work,but absolutely critical to your Compan
154、ys investment approach.14Annual Report 2022ESG Highlights for the Company Continued3.Climate and environmental impactChina is both the largest single emitter of carbon dioxide globally,and also-by some distance the worlds top investor in renewable energy.China has steadily funded research into renew
155、ables over the past decades,with the aim of both decarbonising its own energy system,and establishing itself as the winner as the world seeks to decarbonise.China has set ambitious targets for decarbonisation,including its peak carbon and net-zero pledges.This presents compelling investment opportun
156、ities.Not just in the context of the domestic Chinese market,but because Chinese renewables companies are worldleaders and will be central to decarbonisation globally.Chinese companies are also increasingly conscious of their own environmental impact and carbon footprint.When conducting research,ACI
157、C looks for companies that are either maximising their energy efficiency,minimising their carbon footprint,or providing products or services that allow other companies to do the same.We are able to get reliable data from companies.This is the starting point for engagement in order to understand how
158、companies are managing their carbon emissions,water or energy risk and other factors.While many Chinese companies are willing to disclose snapshot statistics(current year water consumption,for example),they tend to bes less willing to disclose targets publicly for fear of not achieving targets.Howev
159、er,many companies are doing a lot more than they disclose publicly.Engagement and disclosureOur approach is to engage collaboratively with portfolio companies,with the aim of sharing expectations and disclosure of best practices,to help maintain and enhance the ESG standards of these companies.These
160、 meetings provide an opportunity to discuss various relevant ESG issues including board composition,remuneration,audit,climate change,labour issues,human rights,bribery and corruption.Companies are strongly encouraged to set clear targets or key performance indicators on all material ESG risks so as
161、 to enable performance monitoring.Discussions cover both risk and opportunities;our Investment Manager challenges management teams constructively on issues relating to strategy and execution,as well as capital allocation and return.These engagements are collaborative and usually long-term.Please see
162、 below for some specific examples of our Investment Managers engagement and its outcome.ESG case study:Proya CosmeticsProya Cosmetics(“Proya”)is Chinas fifth largest beauty and skincare company.Proya has five brands,focused on younger consumers and is enjoying rapid sales growth through its online c
163、hannels and boutiques.The company has invested in product upgrades and innovation,expanding beyond its traditional skin-care related products into colour cosmetics.Our Investment Manager has engaged with Proya on several issues,including its use of certain chemicals in products,animial testing and s
164、ustainable packaging.Proya now closely follows Chinas strict environmental protection laws and regulations.It has also eliminated all non-degradable raw materials such as microbeads from its products,replacing them with natural degradable materials.Up until October 2022,Proya was rated CCC rating by
165、 MSCI,and was considered an ESG“laggard”.However,based on on-the-ground engagement,it was clear that the companys management was more advanced in its thinking and ESG practices than its disclosures suggested.Therefore,we encouraged management to improve disclosures.As a result,MSCI has now upgraded
166、the Proyas rating to BBB,which is considered an“average”rating and our Investment Manager expects this to advance further over time with the companys understanding of its ESG obligations and opportunities for further improvements.15abrdn China Investment Company LimitedOverviewStrategic ReportPortfo
167、lioGovernanceFinancial StatementsCorporate InformationESG case study:Kweichow MoutaiKweichow Moutai is a high-end Chinese producer of baijiu,the worlds biggest-selling spirit.Our Investment Manager has invested in Kweichow Moutai for a number of years.The companys products are hugely popular in Chin
168、as massive baijiu market.Male consumers,who account for most baijiu consumption,tend to drink premium baijiu such as Kweichow Moutai as they grow older and wealthier.Swelling numbers of high-net-worth individuals in China should therefore be a powerful long-term driver of demand.We have actively eng
169、aged with the company on a range of topics including climate change,environmental practices,labour management,human rights and stakeholder interests and corporate governance.We reviewed the companys 2019 corporate and social responsibility(CSR)report and believe that its ESG practices,and disclosure
170、s,have been improving.Meanwhile,Kweichow Moutai sought specific feedback from investors on a range of ESG-related topics.In January 2022,we contacted the Board to encourage the company to establish energy efficiency targets and distribute its CSR report to a wider audience.MSCI recently upgraded the
171、 companys ESG rating from CCC to B.Our Investment Manager believes that its engagement with the company has contributed to,and will continue to contribute to,a higher ESG rating and positive outcomes for stakeholders.16Annual Report 2022Manager(abrdn Fund Managers Limited)The Companys Alternative In
172、vestment Fund Manager is abrdn Fund Managers Limited(previously know as Aberdeen Standard Fund Managers Limited)(“AFML”or the“Manager”),which is a wholly owned subsidiary of abrdn plc and is authorised and regulated by the FCA.AFML has been appointed to provide investment management,risk management
173、and promotional activities to the Company.The abrdn Groups assets under management and administration were 508 billion as at 30 June 2022,managed for a range of clients including 22 UK-listed closed end investment companies.Investment Manager(abrdn Hong Kong Limited)The Companys portfolio is managed
174、 by abrdn Hong Kong Limited(“aHKL”)by way of a group delegation agreement in place between AFML and aHKL.aHKL is authorised and regulated by the Securities and Futures Commission of Hong Kong.The Investment Management TeamNicholas YeoDirector and Head of Equities,ChinaNicholas Yeo is the Head of Chi
175、na/Hong Kong Equities team at abrdn.Nicholas joined abrdn in 2000 via the acquisition of Murray Johnstone.He was seconded to the London Global Emerging Market team for two years where he covered EMEA and Latin American companies,before returning to the Asian Equities team in Singapore in March 2004.
176、In March 2007,he transferred to Hong Kong to lead Chinese equity research.Nicholas holds a BA(Hons)in Accounting and Finance from The University of Manchester and an MSc in Financial Mathematics from Warwick Business School.He is a CFA charterholder.Elizabeth KwikInvestment ManagerElizabeth Kwik is
177、an Investment Manager on the China/Hong Kong Equities Team at abrdn where she is responsible for researching the Consumer Discretionary,Automobiles&Components and Banking sectors.Elizabeth sits on the China A share and All China equity fund portfolio construction groups.She joined abrdn in 2013.Eliz
178、abeth holds a Bachelor of Science in Economics from the London School of Economics.She is a CFA charterholder.Information about the Manager,Investment Manager and Investment Management TeamPortfolioThe Companys NAV total return for the Financial Year was-37.0%,which compares to MSCI China All Shares
179、 Index Net Total Return in sterling terms of-31.5%for the Financial Year.17abrdn China Investment Company LimitedTen Largest InvestmentsTencent(7.0%)An innovative leader in Chinas internet sector with a strong presence in fintech and cloud segments,backed by an entrenched social media and payment ec
180、osystem.Contemporary Amperex Technology(3.2%)The largest lithium battery maker in the world with leading technology and supply chain advantage,set to benefit from rise of electric vehicle and energy storage.Kweichow Moutai(4.9%)The largest maker of Chinese alcohol spirit Baijiu,positioned in the ult
181、rapremium space where there are few competitors.The company is well placed to capture rising domestic consumption trends in China.China Tourism Group Duty Free(3.2%)Chinas largest duty-free operator that is well placed to benefit from supportive government policy and rising demand for duty-free cosm
182、etics on the mainland.Meituan(4.3%)A diversified online services platform with over 400 million users,offering services including food delivery,travel bookings and wedding planning.It is optimally placed to capture rising consumption in mainland China.Bank of Ningbo(3.1%)A city bank focused on lendi
183、ng to small and medium enterprises in the affluent Ningbo-Zhejiang region.The bank has shown superior returns and asset quality over the years.China Merchants Bank(3.9%)A best-in-class retail bank in China,offering diversified financial services with a solid track record and sound risk management pr
184、actices in place.JD.com(3.0%)An online retailer with an edge in its strong logistics network.The company has shown improving corporate governance and management quality over the years.Alibaba Group(3.6%)The Chinese internet group is a leading global e-commerce company with leading platforms includin
185、g Taobao and T-mall in the mainland.The company also has interests in logistics and media as well as cloud computing platforms and payments.Ping An Bank(2.6%)One of the three main pillars of the Ping An Group,a reputable retail bank offering services in retail and corporate banking,including investm
186、ent banking services with solid management track record.%shows the percentage of net assets invested in each holding.18Annual Report 2022InvestmentsPortfolio listing as at 31 October 2022CompanyIndustry (Sub-Sector)Value(000)Percentage of net assets(%)Tencent Holdings LtdInteractive Media&Services16
187、,3237.0Kweichow Moutai Co LtdBeverages11,4354.9MeituanInternet&Direct Marketing Retail9,8824.3China Merchants Bank Co LtdBanks9,0073.9Alibaba Group Holding LtdInternet&Direct Marketing Retail8,2443.6Contemporary Amperex Technology Co LtdElectrical Equipment7,3643.2China Tourism Group Duty Free Corp
188、LtdBanks7,3263.2Bank of Ningbo Co LtdBanks7,1253.1JD.com IncInternet&Direct Marketing Retail6,9183.0Ping An Bank Co LtdBanks6,0352.6Top ten investments89,65938.8AIA Group LtdInsurance6,0272.6Glodon Co LtdSoftware5,1342.2Proya Cosmetics Co LtdPersonal Products5,1062.2Wanhua Chemical Group Co LtdChemi
189、cals5,0442.2LONGi Green Energy Technology Co LtdSemiconductors&Semiconductor Equipment4,7312.0Shenzhen Mindray Bio-Medical Electronics Co LtdTextiles,Apparel&Luxury Goods4,5842.0Sungrow Power Supply Co LtdElectrical Equipment4,5331.9Nari Technology Co LtdElectrical Equipment4,0331.7Yunnan Energy New
190、 Material Co,Ltd.Containers and Packaging3,8731.7Hundsun Technologies IncSoftware3,8711.7Top twenty investments136,59559.0Chacha Food Co LtdFood Products3,7711.6Fuyao Glass Industry Group Co LtdAuto Components3,7141.6NetEase IncInteractive Media&Services3,6071.6Midea Group Co.,Ltd.Electrical Equipme
191、nt3,5991.5Hefei Meiya Optoelectronic Technology IncMachinery3,5841.5Li Ning Co LtdTextiles,Apparel&Luxury Goods3,5311.5Hong Kong Exchanges&Clearing LtdCapital Markets3,4151.5Sinoma Science&Technology Co LtdChemicals3,4141.5Aier Eye Hospital Group Co LtdHealth Care Providers&Services3,3191.4Shanghai
192、M&G Stationery IncCommercial Services&Supplies3,2411.4Top thirty investments171,79074.1Foshan Haitian Flavouring&Food Co LtdFood Products3,1591.4Venustech Group IncSoftware3,1121.3StarPower Semiconductor Ltd.Semiconductors&Semiconductor Equipment3,0671.3By-health Co LtdPersonal Products3,0341.319abr
193、dn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationInvestments ContinuedCompanyIndustry (Sub-Sector)Value(000)Percentage of net assets(%)China Vanke Co LtdBanks3,0261.3Shenzhou International Group Holdings LtdTextiles,Apparel&Luxury
194、 Goods2,9871.3China Resources Land LimitedReal Estate Management&Development2,9341.3Amoy Diagnostics Co LtdBiotechnology2,8301.2Estun Automation Co.,LtdMachinery2,7241.2Hangzhou Tigermed Consulting Co LtdLife Sciences Tools&Services2,6061.1Top forty investments201,26986.8Wuxi Biologics Cayman IncLif
195、e Sciences Tools&Services2,5451.1China Meidong Auto Holdings LtdBanks2,4491.1Luxshare Precision Industry Co LtdElectronic Eqpt Instruments&Components2,2591.0Inner Mongolia Yili Industrial Group Co LtdBeverages2,2311.0Jiangsu Hengrui Medicine Co LtdPharmaceuticals2,2110.9Zhejiang Weixing New Building
196、 Materials Co.,Ltd.Plumbing Fixtures&Fittings2,1220.9Anhui Conch Cement Company LimitedConstruction and Materials2,0570.9Maxscend Microelectronics Co LtdElectronic Eqpt Instruments&Components1,8350.8Komodo FundUnit Trusts1,3190.6Yantai China Pet Foods Co LtdFood Products1,2910.5Top fifty investments
197、221,58895.6GDS Holdings LtdIT Services1,0560.4Zai Lab LtdBiotechnology9610.4Wuliangye Yibin Co LtdBeverages4590.2Total investments224,06496.6Cash plus other net current assets and liabilities7,7793.4Net assets231,843100.021.4%0.6%14.4%13.6%12.3%11.2%8.9%8.5%6.4%2.7%Sector breakdown%Consumer Discreti
198、onary21.4 Financials14.4 Consumer Staples13.6 Industrials12.3 Information Technology11.2 Communication Services8.9 Health Care8.5 Materials6.4 Real Estate Unit Trusts2.70.6Sector Breakdown as at 31 October 2022Source:Datastream20Annual Report 2022GovernanceThe Company is committed to high standards
199、of corporate governance and applies the principles identified in the UK Corporate Governance Code and the AIC Code of Corporate Governance.All Directors are considered by the Board to be independent of the Company and the Manager and free of any material relationship with the Manager.21abrdn China I
200、nvestment Company LimitedThe Directors of abrdn China Investment Company Limited(“the Company”)present the report and financial statements for the Financial Year ended 31 October 2022.Investment Objective and Investment PolicyA change of investment objective and investment policy was approved by sha
201、reholders on 26 October 2021.The new investment objective and investment policy is set out below:Investment Objective The Companys investment objective is to produce long-term capital growth by investing predominantly in Chinese equities.Investment Policy The Company invests in companies listed,inco
202、rporated or domiciled in the Peoples Republic of China(“China”),or companies that derive a significant proportion of their revenues or profits from China operations or have a significant proportion of their assets there.In furtherance of the investment policy,the portfolio will normally consist prin
203、cipally of quoted equity securities and depositary receipts although unlisted companies,fixed interest holdings or other non-equity investments may be held.Investments in unquoted companies will be made where the Investment Manager has a reasonable expectation that the company will seek a listing in
204、 the near future.The portfolio is actively managed and may be invested in companies of any size and in any sector.The Company is expected to have an ESG rating equal to,or better than,the MSCI China All Shares Index and have meaningfully lower carbon intensity than the Index.The portfolio is activel
205、y managed and the Company aims to outperform the MSCI China All Shares Index(in sterling terms).This index is used as a reference point for portfolio construction and as a basis for setting risk constraints,but does not incorporate any sustainability criteria.In order to achieve its objective,the Co
206、mpany will take positions whose weightings diverge from the index or invest in securities which are not included in the index.Investments may deviate significantly from the components of,and their respective weightings in,the MSCI China All Shares Index.Due to the active nature of the management pro
207、cess,the Companys performance profile may deviate significantly from that of the index.The portfolio is expected normally to comprise between 30 and 60 securities(including any unlisted securities held)but may hold up to 100.No individual issuer will represent a greater weight in the portfolio than
208、the lower of(i)10%or (ii)its weight in the MSCI China All Shares Index(in sterling terms)plus 5%,as measured at the time of investment.The maximum permitted exposure to a single group is 20%of the Companys total assets,as measured at the time of investment.The Company may continue to hold certain il
209、liquid assets which were acquired prior to adoption of this policy pending their orderly disposal.These assets are not expected to represent a significant proportion of the portfolio.Risk Management The Company will at all times be invested in several sectors.While there are no specific limits place
210、d on exposure to any one particular sector,the Company will at all times invest and ensure that the portfolio is managed in a manner consistent with spreading investment risk.The Company may invest in unquoted securities and/or securities with lock-up periods provided that such investments,in aggreg
211、ate,are limited to 10%of the Companys net assets at the time any such investment is made.With prior approval of the Board,the Company may use derivatives for the purposes of efficient portfolio management in order to reduce,transfer or eliminate investment risk in the Companys portfolio.Derivative i
212、nstruments in which the Company may invest may include foreign exchange forwards,exchange-listed and over-the-counter options,futures,options on futures,swaps and similar instruments.The Company does not intend to enter into derivative or hedging transactions to mitigate against wholesale general cu
213、rrency or interest rate risk.The Company may invest no more than 10%in aggregate of its gross asset value at the time of acquisition in other listed closed-ended investment funds,but this restriction will not apply to investments in such funds which themselves have stated investment policies to inve
214、st no more than 15%of their gross asset value in other closed-ended investment funds.Gearing The Company may employ gearing and may in aggregate,borrow amounts equalling up to 20%of gross asset value,although the Board expects that borrowings will typically not exceed 15%of gross asset value at the
215、time of drawdown.While it is intended that the Company will be fully invested in normal market conditions,the Company may hold cash on deposit or invest on a temporary basis in a range of cash equivalent instruments.There is no restriction on the amount of cash or cash-equivalent instruments that th
216、e Company may hold.Directors Report22Annual Report 2022Business ActivitiesThe Company is a closed-ended investment company incorporated and resident in Guernsey and holds a Premium Listing on the London Stock Exchange.Following the merger with New Thai,the Company had been granted approval by HMRC t
217、o be classified as an investment trust under Chapter 4 of Part 24 CTA 2010 and Chapter 1 of Part2 of The Investment Trust Tax Regulations.As a result,the Company became an investment trust with effect from 9 November 2021 and is registered in the United Kingdom for tax purposes.Results and Dividends
218、The Companys total comprehensive income for the Financial Year was a loss of 140,954,000(2021:profit of 64,156,000).The Companys revenue return for the Financial Year amounted to a profit of 1,851,000(2021:loss of 282,000).During the Financial Year,the Board revised the Companys dividend policy.The
219、Companys dividend policy is to distribute a sufficient proportion of income delivered by the portfolio to ensure that the Company retains its investment trust status.To achieve this objective,At the end of the Financial Year,the profitability of the Company was such that the Board is able to declare
220、 an interim dividend in respect of the Financial Year ended 31 October 2022 of 3.2p per Ordinary share which will be payable to Shareholders on 17 March 2023 with an associated ex-dividend date of 23 February 2023.Dividend PolicyPrior to the merger with Aberdeen New Thai Investment Trust PLC,the Com
221、panys policy was to make quarterly distributions by way of dividends funded from a combination of income and capital.During the Financial Year,the Board revised its dividend policy to bring distributions in line with the income delivered by the portfolio with the objective of distributing a sufficie
222、nt proportion to ensure that the Company retains its investment trust status.In this context,this requires that the Company retains no more than 15%of the income generated by the portfolio in a financial year.The Board therefore expects that the dividend will be materially lower than has been the ca
223、se in the past and will vary year-on-year.It is anticipated but not expected that the Company will pay a single dividend in respect of each financial year once the annual results are known.Investment Report and OutlookThe Chairmans Statement and Investment Managers Report incorporate a review of the
224、 highlights during the Financial Year and the outlook for the forthcoming year.Key Performance Indicators(“KPIs”)The Companys success in attaining its objectives is measured by reference to the following KPIs:(a)The Company seeks to generate consistent relative returns ahead of those generated by it
225、s Benchmark.(b)The Company seeks to achieve a positive absolute return over the longer term through its exposure to Chinese equities.PerformanceAn overview of the Companys performance is contained in the Chairmans Statement and Investment Managers Report.Ongoing ChargesFor the Financial Year ended 3
226、1 October 2022,the Companys ongoing charges figure,calculated using the Association of Investment Companies(“AIC”)methodology,was 0.60%(2021:0.98%),the calculation of which can be found in the Alternative Performance Measures section of this AnnualReport.Principal Risks,Emerging Risks and Uncertaint
227、iesTogether with the issues discussed in the Chairmans Statement and the Investment Managers Report,the Board considers that the main risks and uncertainties faced by the Company fall into the following categories:(i)Risks relating to the Company The Company has no employees and the Directors have b
228、een appointed on a non-executive basis.The Company is therefore reliant upon the performance of third-party service providers for its executive functions and is exposed to the risk that misconduct by employees of those service providers,any failure by any service provider to carry out its obligation
229、s to the Company in accordance with the terms of its appointment,or the termination of those appointments could have an adverse effect on the portfolio and the Companys financial condition,results of operations and prospects,with a consequential adverse effect on the market value of its Ordinary sha
230、res.23abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationDirectors Report Continued(ii)Risks relating to the investment policy There can be no guarantee that the Company will achieve its investment objective or that investors wil
231、l get back the full value of their investment.The investments of the Company are subject to the risk of changes in market prices or macroeconomic factors.Any such changes could have an adverse effect on the value of the portfolio,the Companys financial condition,results of operations and prospects,w
232、ith a consequential adverse effect on returns to shareholders and the market value of its Ordinary shares.The Companys NAV is inherently sensitive to the performance of Chinese equity markets which could result in the Companys Ordinary shares trading at a discount or being less liquid.The portfolio
233、will be concentrated in a single country and will therefore be exposed to risks associated with geographical concentration,including being exposed to the fluctuations of a more limited geographical market and fewer currencies than a less concentrated portfolio.The Company is exposed to particular ec
234、onomic,regulatory,political,geopolitical,environmental and taxation risks associated with investments in the Peoples Republic of China,which could have an adverse effect on the portfolio,the Companys financial condition,results of operations and prospects were they to materialise,with a consequentia
235、l adverse effect on the market value of its Ordinary shares.The Company is exposed to currency and foreign exchange risk as a result of holding investments denominated in currencies other than sterling which could have an adverse effect on the portfolio and the Companys financial condition,results o
236、f operations and prospects,with a consequential adverse effect on the market value of its Ordinary shares.(iii)Risks relating to the Manager/Investment Manager The success of the Company is dependent on the Alternative Investment Fund Manager(“AIFM”)and the Investment Manager and their expertise,key
237、 personnel,and ability to source and advise appropriately on investments.As a result of this,the Companys portfolio,financial condition,results of operations,prospects and the value of the shares could be adversely affected by:competitive pressures on the AIFM or the Investment Managers ability to s
238、ource and make successful investments;any failure by the AIFM or the Investment Manager to carry out due diligence and obtain relevant information on prospective investments;or any loss of key personnel of the AIFM or the Investment Manager and any inability to recruit appropriate replacements in a
239、timely fashion.(iv)Risks relating to regulation,taxation and the Companys operating environment The Covid-19 pandemic may adversely affect the performance of investee companies due to ongoing macroeconomic and market uncertainty,which may in turn adversely impact the Companys financial performance a
240、nd prospects and the value of its portfolio.Changes in the laws or regulations in Guernsey or the UK which govern the Companys and the Investment Managers operations may have an adverse effect on the ability of the Company and the Manager/Investment Manager to carry on their respective businesses an
241、d any such changes could have an adverse effect on the portfolio and on the Companys financial condition,results of operations and prospects,with a consequential adverse effect on the market value of the Shares.Management or mitigation of the above risksThe Company has a risk management process in p
242、lace.This mechanism enables the Board to monitor the Companys spread of investments across several sectors.The Board receives and monitors reports from the Manager and the Administrator on a quarterly basis at the minimum.(v)Internal RisksPoor allocation of the Companys assets by the Investment Mana
243、ger,poor governance,compliance or administration,including poor controls over cyber security,could result in shareholders not making acceptable returns on their investment in the Company.Management or mitigation of internal risksThe Board monitors the performance of the Manager and the other key ser
244、vice providers at regular Board meetings.The Manager provides reports to the Board on compliance matters and the Administrator provides reports to the Board on compliance and other administrative matters.The Board has established various committees to ensure that relevant governance matters are addr
245、essed by the Board.The management or mitigation of internal risks is described in detail in the Corporate Governance Statement on pages 37 and 38.(vi)Emerging RisksEmerging risks are slow moving trends,innovations and shifts with potential consequence to a specific industry or sector in the long-ter
246、m.They can include movements in:demographics,24Annual Report 2022economics,society,technological innovations,national policy and governance.Long-term shifts in temperatures and weather patterns caused by human activity,primarily due to the burning of fossil fuels,or by natural phenomena may have a n
247、egative effect on ecological and socioeconomic wellbeing.Management or mitigation of emerging risksA risk management register and associated risk heat map,providing a visual reflection of the Companys identified and emerging risks have been established to monitor and mitigate risks to the Company,wi
248、th both a risk pre mitigation and risk post mitigation score determined,depending on the impact of the risk combined with the probability of the risk occurring.(vii)Failure to manage premium and/or discount The Boards discount control policy is that the Companys shares should not trade at a price wh
249、ich,on average,represents a discount that is out of line with the Companys direct peer group.To assist the Board in taking action to deal with a material and sustained deviation in the Companys discount from its peer group,it seeks authority from Shareholders annually to buy back shares.Shares may b
250、e repurchased when,in the opinion of the Board and taking into account factors such as market conditions and the discounts of comparable companies,the Companys discount is higher than desired and shares are available to purchase in the market.The Board is of the view that the principal purpose of sh
251、are repurchases is to enhance the net asset value(“NAV”)for remaining shareholders,although it may also assist in addressing the imbalance between the supply of and demand for the Companys shares and thereby reduce the scale and volatility of the discount at which the shares trade in relation to the
252、 underlying NAV.BorrowingsThe Company may employ gearing and may in aggregate borrow amounts equaling up to 20%of gross asset value,although the Board expects that borrowings will typically not exceed 15%of gross asset value at the time of drawdown.The facility agreement with The Royal Bank of Scotl
253、and International(London Branch)(“RBSI”)terminated on 26 March 2022.On the 13 April 2022 the Company entered into an unsecured 2 year multicurrency revolving loan facility with Industrial and Commercial Bank of China Limited,London Branch(“ICBC”),under which loans with a maximum principal amount of
254、15million may be drawn(with a 15 million accordion option).The revolving loan facility agreement with ICBC terminates on 12 April 2024.As at 31 October 2022,no amount was drawn down(2021:nil).GearingAt 31 October 2022,the Company had no borrowings drawn down,hence no gearing(2021:net gearing of nil%
255、).The Directors monitor the Companys gearing on a regular basis in accordance with the Companys investment policy and under advice from the Investment Manager.Market Information The NAV per Ordinary share is calculated for each business day and is published through a regulatory information service.O
256、rdinary Shares in IssueAs at 31 October 2022,the Company had 45,283,575(2021:45,965,159)Ordinary shares in issue(excluding shares held in treasury).The Company also held 16,889,372 Ordinary shares in treasury(2021:8,653,348).Purchase of Own SharesThe Company purchased 1,341,251 Ordinary shares durin
257、g the Financial Year(2021:nil).Since 1 November 2022 to the date of signing,the Company purchased a further 1,268,709 Ordinary shares and held these in treasury.As described above,the Company seeks authority from shareholders annually to buy back Shares,in order to assist the Board in taking action
258、to deal with material and sustained deviation in the Companys discount from its peer group.The Companys present authority to make market purchases of its own Ordinary shares will expire at the conclusion of the Annual General Meeting(AGM)at which time a new authority to buy back shares will be sough
259、t.The timing of any purchase will be decided by the Board.Any shares bought back by the Company will either be cancelled,or if the Directors so determine,held in treasury(and may be re-sold).Purchases of own shares will only be made at a price representing a discount to NAV per Ordinary share.The Pa
260、nel on Takeovers and Mergers(the“Panel”)must be consulted in advance in any case where Rule 9 of the Takeover Code(the“Code”)might be relevant.The Company has consulted with the Panel in relation to the proposed buy-back authority.On the basis that City of London Investment Management Company Limite
261、d(“CoL”)has not appointed a representative to the board of the Company and that none of the directors of the Company are acting in concert with CoL,the Panel has confirmed on an ex parte basis to the Company that the increase in CoLs shareholding,as a result of the 25abrdn China Investment Company L
262、imitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationDirectors Report Continuedpurchase by the Company of its own shares pursuant to the authority conferred by Resolution 11,will not trigger an obligation for CoL to make a mandatory offer for the Company under Ru
263、le 9 of the Code.Allotment of Shares and Disapplication of Pre-Emption RightsAt the forthcoming AGM,an ordinary resolution will be proposed to confer an authority on the Directors to allot and issue up to 2,200,743 shares(or,if less,the number of shares representing 5%of the issued Ordinary share ca
264、pital of the Company as at the date of the passing of this resolution)without regard to any and all rights of pre-emption or similar rights,whether under the Articles of Incorporation of the Company(including,without limitation,Article 6.2(a)or otherwise.This authority will expire at the conclusion
265、of the AGM in 2024.The Directors consider that the authority proposed to be granted at the AGM are necessary to retain flexibility,although they do not,at the present time,have any intention of exercising such authorities.Significant ShareholdersAs at 31 October 2022 and as at the date of this repor
266、t,the Company had noted the following significant shareholdings of the issued Ordinary shares(excluding treasury shares).31 October 2022 Holding%City of London Investment Management12,572,32027.8Lazard Asset Management10,641,73523.5Allspring Global Investments8,798,71519.51607 Capital Partners2,905,
267、9506.4West Yorkshire Pension Fund1,522,6563.4Since the end of the Financial Year,the Company has been notified that City of London Investment Management Company Limiteds holding has changed to 12,859,435 Ordinary shares(29.0%),Lazard Asset Management LLCs holding has changed to 6,690,499 Ordinary sh
268、ares(15.0%)and Allspring Global Investments Holdings,LLCs holding has changed to 9,059,348 Ordinary shares(20.0%).There have been no other changes notified to the Company as at the date of this Report.Non-Mainstream Pooled Investments(“NMPIs”)Financial Conduct Authority(“FCA”)rules determine which i
269、nvestment products can be promoted to ordinary retail investors.Under these rules,certain investment products are classified as NMPIs and as a result face restrictions on their promotion to retail investors.The Company currently conducts its affairs so that its shares can be recommended by Independe
270、nt Financial Advisers(“IFAs”)to retail investors in accordance with the FCA rules in relation to NMPIs and intends to continue to do so for the foreseeable future.The Board has been advised that the Companys shares are excluded from the FCAs restrictions which apply to NMPIs because they are shares
271、issued by a non-UK company which would qualify as an investment trust if resident in the UK.Continuation Vote and Future Performance Linked Tender OffersThe Company does not have a fixed life but the Directors consider it desirable that shareholders have the opportunity to review the future of the C
272、ompany at appropriate intervals.At the EGM held on 26 October 2021,shareholders approved new Articles of Association which contain a provision for continuation resolutions to be put to shareholders such that,at the Companys AGM to be held in 2027 and at every fifth AGM thereafter,the Directors under
273、take to propose an ordinary resolution that the Company continue in existence(the“Continuation Resolution”).If the Continuation Resolution is not passed then within four months of the continuation vote failing the Directors shall formulate and put to Members proposals relating to the future of the C
274、ompany having had regard to,inter alia,prevailing market conditions and applicable regulations and legislation.In addition,the Board intends that,if the Companys net asset value total return over the five years ending October 2026 does not exceed the total return of the MSCI China All Shares Index(i
275、n sterling terms),the Company will undertake a tender offer for up to 25%of the Companys issued share capital(excluding any shares held in treasury).Any such tender offer will be at a price equal to the then prevailing formula asset value(FAV)per share less 2%.26Annual Report 2022Automatic Exchange
276、of InformationForeign Account Tax Compliance Act(“FATCA”)FATCA legislation,which was introduced in the United States of America,places obligations on foreign financial institutions such as the Company.In Guernsey,local law has been introduced that gives effect to the FATCA requirements and certain r
277、eporting obligations are placed on financial institutions as defined by this act.The Company is registered as a reporting financial institution and is subject to ongoing reporting obligations under the legislation.The Common Reporting Standard(“CRS”)CRS is the result of the drive by the G20 nations
278、to develop a global standard for the automatic exchange of financial account information,developed by the Organisation for Economic Cooperation and Development.Guernsey has introduced local legislation to give effect to CRS.Guernsey financial institutions are required to identify,review and report o
279、n accounts maintained by them which are held by account holders resident in jurisdictions with which Guernsey has agreed to exchange information.Depositary and Custody ServicesNorthern Trust(Guernsey)Limited has been appointed to provide depositary and custody services to the Company.ManagementSince
280、 1 June 2016,the Companys Alternative Investment Fund Manager has been abrdn Fund Managers Limited(previously called Aberdeen Standard Fund Managers Limited)(“AFML”),which is a wholly owned subsidiary of abrdn plc and is authorised and regulated by the FCA.AFML has been appointed to provide investme
281、nt management,risk management and promotional activities to the Company.Following approval of the change to the Companys investment policy at the EGM on 26 October 2021,the Companys portfolio is managed by abrdn Hong Kong Limited(“aHKL”)by way of a group delegation agreement in place between AFML an
282、d aHKL.Promotional activities have been delegated to abrdn Investments Limited(AIL)(previously called Aberdeen Asset Managers Limited).Prior to the approval of the change to the Companys investment policy at the EGM on 26 October 2021,the Companys portfolio was managed by AIL by way of a group deleg
283、ation agreement in place between AFML and AIL.Immediately following the EGM a sub-delegation agreement was put in place between aHKL and AIL in order that the latter could manage the sale of the legacy assets.Once those assets have been sold,the sub-delegation agreement will be ended.Further details
284、 of the key terms of the agreement and fees payable to the Manager can be found in note 6 to the financial statements.Alternative Investment Fund Managers Directive(“AIFMD”)The Company appointed AFML as its Alternative Investment Fund Manager(“AIFM”)with effect from 1 June 2016.An AIFM must ensure t
285、hat an Annual Report for the Company is made available to investors for each financial year,provide the Annual Report to investors on request and make the Annual Report available to the FCA.The investment funds sourcebook of the FCA details the requirements of the Annual Report.All the information r
286、equired by those rules and relevant AIFM remuneration disclosures are or will be available on the Companys website(abrdnchina.co.uk).Management EngagementIn accordance with the requirements of the FCAs Listing Rules,the Management Engagement Committee has reviewed whether to retain AFML as the Manag
287、er of the Company.The Management Engagement Committee has agreed that,given the performance record of the Investment Manager and the specialist knowledge of AFML,it is in the best interests of shareholders as a whole to continue with AFMLs appointment as Manager to the Company.Company Secretary and
288、AdministratorsVistra Fund Services(Guernsey)Limited(“Vistra”)is appointed as Administrator and Secretary to the Company.Sanne Fund Services(UK)Limited(“Sanne”)is appointed by Vistra to act as administration agent in the United Kingdom.Further details on the fees payable under these agreements can be
289、 found in note 6 to the financial statements.Payment of SuppliersIt is the Companys payment policy to obtain the best terms for all business and therefore there is no consistent policy as to the terms used.The Company contracts with its suppliers setting out the terms on which business will take pla
290、ce and abides by such terms.A high proportion of expenses,including management and administration fees,are paid within the month when invoiced.There were no overdue amounts owing to trade creditors at 31 October 2022.27abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernance
291、Financial StatementsCorporate InformationDirectors Report ContinuedSettlement of Share TransactionsTransactions in the Companys Ordinary shares are settled by the CREST share settlement system.DonationsThe Company did not make any political or charitable donations during the Financial Year under rev
292、iew.Going ConcernThe Directors have adopted the going concern basis in preparing the financial statements.The Board formally considered the Companys going concern status at the time of the publication of these financial statements and a summary of the assessment is provided below.Since the adoption
293、of the new investment policy,as approved by shareholders at the EGM held on 26 October 2021,the Board considered it appropriate to reset the five year interval between Continuation Resolutions so that the next Continuation Resolution will be put to shareholders at the Annual General Meeting of the C
294、ompany to be held in 2027.The Directors believe that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this document.In reaching this conclusion,the Directors have considered the liquidity of the Companys portfolio of investme
295、nts as well as its cash position,income and expense flows.As at 31 October 2022,the Company held 8.5 million in cash and 224.1 million in investments.It is estimated that approximately 99%of the investments held at the Financial Year end could be realised in one month.The total operating expenses fo
296、r the Financial Year ended were 1.9 million,which on an annualised basis represented approximately 0.60%of average net assets during the Financial Year.The Company also incurred 0.1 million of finance costs.At the date of approval of this report,based on the aggregate of investments and cash held,th
297、e Company has substantial operating expenses cover.The Companys net assets at 9 February 2023 were 311.0 million.The Company has a 15 million revolving loan facility with Industrial and Commercial Bank of China limited,London Branch(ICBC),terminating in April 2024.As at 31 October 2022,none of the I
298、CBC facility was drawn down.The liquidity of the Companys portfolio,as mentioned above,sufficiently supports the Companys ability to repay its borrowings at short notice.Since the Financial Year ended the Investment Manager has drawn down a total of CNH 106m(12.7m)in two tranches.In light of the Cov
299、id-19 pandemic,the Directors have fully considered and assessed the Companys portfolio of investments.A prolonged and deep market decline could lead to falling values of the investments or interruptions to cashflow.However,the Company currently has more than sufficient liquidity available to meet an
300、y future obligations.The Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements and,after due consideration,that the Company is able to continue in operation for a period of at least 12 months from the date of approval of these financial
301、 statements.Covid-19The rapid spread of Covid-19 led governments across the globe to implement policies to restrict the gathering,interaction and/or movement of people.These policies have inevitably impacted and changed the nature of the operations of some aspects of the Company,its key service prov
302、iders and companies in its investment portfolio.Share prices respond to assessments of future economic activity as well as their own forecast performance,and the Covid-19 pandemic has had a material impact on the global economy and may continue to do so for an unknown period of time.Stock markets ha
303、ve seen another year of unprecedented movements in prices and in some cases,uncorrelated with underlying valuations.The Board and Investment Manager have regular discussions to assess the impact of emerging risks,including Covid-19 on both the investment portfolio and on its ability to maximise retu
304、rns for shareholders.See the Chairs Statement and Managers Report for more detailed commentary on the impact of Covid-19 on the Chinese economy and investment portfolio.Viability StatementThe Directors have assessed the prospects of the Company over the period from the date of this report up until 3
305、1 October 2025(the“Period”).The Directors believe that the Period,being approximately three years,is an appropriate time horizon over which to assess the viability of the Company,particularly when taking into account the long-term nature of the Companys investment strategy.In their evaluation of the
306、 prospects of the Company,the Directors have carried out a robust assessment of the emerging and principal risks facing the Company,including those that would threaten its business model,future performance,solvency or liquidity,as set out on pages 23 to 25 of this report.Developments in Chinese and
307、other Asian 28Annual Report 2022markets and portfolio changes are discussed at quarterly Board meetings and the internal control framework of the Company is subject to formal review on at least an annual basis.Under normal market conditions,the majority of the investments held by the Company could b
308、e sold within one month.However,there are circumstances which could lead to a reduction in market liquidity and,therefore,the ability of the Company to realise its investments.The Directors do not expect there to be any material increase in the annual ongoing charges of the Company over the Period.T
309、he Companys income from investments and cash realisable from the sale of its investments provide substantial cover to the Companys operating expenses,and any other costs likely to be faced by the Company over the Period.The continuation of the Company is subject to the approval of shareholders every
310、 five years,with the next vote due to take place at the Annual General Meeting in 2027.Taking the above into account,the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the Period.AuditorKPMG Channel Island
311、s Limited(“KPMG“)was re-appointed as auditor of the Company at the AGM held on 12 April 2022.A resolution for the re-appointment of KPMG Channel Islands Limited as auditor of the Company is to be proposed at the forthcoming AGM.Annual General Meeting(“AGM”)The AGM will be held on 13 April 2023.Furth
312、er details are provided in the Chairmans Statement.The notice of AGM is included in this document.Corporate GovernanceThe Corporate Governance Statement on pages 30 to 38 forms part of this report.Statement of Directors ResponsibilitiesThe Statement of Directors Responsibilities on page 46 forms par
313、t of this report.Helen GreenChairman13 February 202329abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationCorporate Governance StatementThis Corporate Governance Statement forms part of the Directors Report.The Board of abrdn Chin
314、a Investment Company Limited(“the Company”)has considered the principles and recommendations of the Association of Investment Companies(“AIC”)Code of Corporate Governance(“AIC Code”)by reference to the AIC Corporate Governance Guide for Investment Companies(“AIC Guide”)as issued in February 2019 and
315、 available on the AICs website(theaic.co.uk).The AIC Code,as explained by the AIC Guide,addresses all of the principles set out in the UK Corporate Governance Code,issued in July 2018 and available on the FRCs website(frc.org.uk),as well as setting out additional principles and recommendations on is
316、sues that are of specific relevance to the Company.The Board considers that reporting against the principles and recommendations of the AIC Code,and by reference to the AIC Guide(which incorporates the UK Corporate Governance Code),will provide better information to shareholders.The Guernsey Financi
317、al Services Commission revised its Code of Corporate Governance(the“Guernsey Code”)in 2021.Companies which report under the AIC Code are deemed to meet the requirements of the Guernsey Code.The Company has complied with the recommendations of the AIC Code and the relevant provisions of the UK Corpor
318、ate Governance Code,except as set out below.The UK Corporate Governance Code includes provisions relating to:-interaction with the workforce(provisions 2,5 and 6);-the role and responsibility of the chief executive(provisions 9 and 14);-previous experience of the chairman of a remuneration committee
319、(provision 32);and -executive directors remuneration(provisions 33 and 36 to 41).The Board considers these provisions are not relevant to the position of the Company,being an externally managed investment company.The Company has therefore not reported further in respect of these provisions.The Board
320、The Board aims to provide effective leadership so the Company has the platform from which it can achieve its investment objective.Its role is to guide the overall business strategy for the benefit of shareholders and stakeholders,ensuring that their interests are its primary consideration.The intent
321、ion is to create a supportive working environment which allows the Investment Manager the opportunity to manage the portfolio in accordance with the investment policy,through a framework of effective controls which enable risks to be assessed and managed.A procedure has been adopted for the Director
322、s,in the furtherance of their duties,to take independent professional advice at the expense of the Company.Directors are encouraged to attend industry and other seminars,including courses run by the AIC,covering issues and developments relevant to investment companies.Upon joining the Board,new Dire
323、ctors receive an induction and other relevant training is available to Directors on an ongoing basis.CompositionMrs Green was appointed by the Board on 1 July 2016,Ms de Rochechouart was appointed by the Board on 16 April 2019,Ms Anne Gilding and Ms Sarah MacAulay were appointed by the Board on 9 No
324、vember 2021.Mr Bridgeman was appointed by the Board on 1 August 2022.All the Directors hold their office in accordance with the Companys Articles of Incorporation.All Directors are considered by the Board to be independent at the date of this report.30Annual Report 2022Helen GreenStatus:Independent
325、Non-Executive ChairmanExperience:Guernsey resident-is a chartered accountant and has been employed by Saffery Champness,a top 20 firm of chartered accountants since 1984.She qualified as a chartered accountant in 1988,and became a partner in the London office in 1998.Since 2000 she has been based in
326、 the Guernsey office where she is a Client Liaison Director,responsible for trust and company administration.Length of service:6 years,appointed a Director on 1 July 2016 and as Chairman on 1 August 2022Last re-elected to the Board:12 April 2022Contribution:The Nomination Committee has reviewed the
327、contribution of Helen Green in light of her proposed re-election as a Director at the forthcoming AGM and has concluded that she chairs the Board effectively and continues to provide significant accounting and administrative knowledge to the Board.Committee membership:Remuneration Committee,Manageme
328、nt Engagement Committee(Chair)and Nomination Committee(Chairman of the Audit Committee until 1 August 2022,when she was appointed as Chairman of the Board)All other public company directorships:Landore Resources Limited,CQS Natural Resources Growth and Income PLC,and JP Morgan Global Core Real Asset
329、s Limited.31abrdn China Investment Company LimitedOverviewStrategic ReportPortfolioGovernanceFinancial StatementsCorporate InformationCorporate Governance Statement ContinuedMark Bridgeman Status:Independent Non-Executive Director and Chairman of the Audit CommitteeExperience:United Kingdom Resident
330、-Until 2009,Mark had a 19 year executive career in fund management at Schroders plc,as an analyst,fund manager and latterly Global Head of Research.Previous roles at Schroders included Head of Pan European Research,Head of Global Sector Research and an Emerging Markets Fund Manager.He is currently a
331、 non-executive director of Utilico Emerging Markets Trust plc.Length of service:Appointed a Director on 1 August 2022Last re-elected to the Board:n/a(newly appointed)Contribution:The Nomination Committee has reviewed the contribution of Mark Bridgeman in light of his proposed election as a Director
332、at the forthcoming AGM and has concluded that he provides valuable insight to the global fund management sector.He also has recent and relevant financial experience and is an effective Audit Committee Chairman.Committee membership:Audit Committee(Chair),Remuneration Committee,Management Engagement C
333、ommittee and Nomination CommitteeAll other public company directorships:Utilico Emerging Markets Trust plcEleonore de Rochechouart Status:Independent Non-Executive DirectorExperience:United Kingdom Resident-is a partner of Res Familiaris LLP,a London-based wealth and corporate management advisory boutique.Prior to joining Res Familiaris in 2010,Eleonore spent 20 years in the financial services ind
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