During the fourth quarter, we continued to build positions in China’s A-share market. We added two more new names to this space, Jiangsu Hengrui Medicine and Kweichow Moutai (SHSE:600519). While Jiangsu Hengrui is the market leader in Chinese pharmaceuticals, Moutai—China’s most well-recognized premier brand of white liquor—saw challenges.
For Moutai (SHSE:600519), sales volumes recently contracted due to the government’s anti-extravagance campaign. However, its strong brand positioning has enabled it to maintain its overall profitability. We expect that sale volumes have now troughed, and look forward to any opportunities for recovery.
From Matthews China Fund (Trades, Portfolio) Q4 2014 Commentary.
