During the quarter, we initiated a position in New China Life Insurance (SHSE:601336), a large Chinese life insurance provider. The firm has shifted its strategic focus from scale to profitability, and has demonstrated improving new business margins and increasing sales in protection-oriented products. The company's valuations also became attractive as its stock price suffered a sharp pullback earlier in the year. We believe New China Life will continue to be a major beneficiary of the structural growth of the country's life insurance industry as more people join the middle class and affluence rises. We exited our position in Zhejiang Dahua Technology, a major Chinese security and surveillance equipment provider, due to the company's relatively high overseas exposure amid a climate of intensified U.S.-China trade friction.
From Matthews China Fund (Trades, Portfolio) third-quarter 2018 shareholder letter.
