During the quarter, the industrials sector detracted from overall Fund performance. One of our largest portfolio holdings, China State Construction International (CSCI), posed a significant drag on relative Fund performance. We believe CSCI continues to be one of China’s highest quality construction companies both in terms of growth outlook and profitability. However, there were some market concerns that dampened its stock performance, including the company’s higher-than-usual debt levels and weak China revenue growth. Investors have also expressed concern that CSCI has not received any recent asset injections from its parent company—which tends to boost earnings—as has been done in the past.
Matthews China Fund (Trades, Portfolio) first quarter 2016 commentary.
