NPORT-EX 2 NPORT_6260460779453387.htm

 

Morgan Stanley China A Share Fund, Inc.

Portfolio of Investments

First Quarter Report

March 31, 2020 (unaudited)

 

 

 

Shares

 

Value
(000)

 

Common Stocks (97.8%)

 

 

 

 

 

Aerospace & Defense (1.5%)

 

 

 

 

 

AECC Aviation Power Co., Ltd., Class A

 

2,396,341

 

$

7,102

 

 

 

 

 

 

 

Banks (7.2%)

 

 

 

 

 

Bank of Communications Co., Ltd., Class A

 

8,488,939

 

6,156

 

Industrial & Commercial Bank of China Ltd., Class A

 

38,464,383

 

27,822

 

 

 

 

 

33,978

 

Beverages (0.6%)

 

 

 

 

 

Tsingtao Brewery Co., Ltd., Class A

 

435,900

 

2,793

 

 

 

 

 

 

 

Capital Markets (1.9%)

 

 

 

 

 

Huatai Securities Co. Ltd.

 

3,660,182

 

8,829

 

 

 

 

 

 

 

Commercial Services & Supplies (0.8%)

 

 

 

 

 

Focused Photonics Hangzhou, Inc., Class A

 

2,277,254

 

3,799

 

 

 

 

 

 

 

Electrical Equipment (1.9%)

 

 

 

 

 

TBEA Co., Ltd., Class A

 

4,656,437

 

4,735

 

Zhuzhou CRRC Times Electric Co., Ltd. H Shares (a) 

 

1,409,000

 

4,174

 

 

 

 

 

8,909

 

Electronic Equipment, Instruments & Components (2.2%)

 

 

 

 

 

Foxconn Industrial Internet Co. Ltd., Class A

 

5,684,231

 

10,419

 

 

 

 

 

 

 

Food Products (3.7%)

 

 

 

 

 

Chongqing Fuling Zhacai Group Co. Ltd., Class A

 

2,629,831

 

11,605

 

Inner Mongolia Yili Industrial Group Co., Ltd., Class A

 

1,416,115

 

5,917

 

 

 

 

 

17,522

 

Gas Utilities (2.9%)

 

 

 

 

 

Shenzhen Gas Corp. Ltd., Class A

 

13,533,007

 

13,955

 

 

 

 

 

 

 

Health Care Providers & Services (7.0%)

 

 

 

 

 

China National Accord Medicines Corp. Ltd., Class A

 

894,316

 

5,003

 

Huadong Medicine Co., Ltd., Class A

 

1,969,808

 

4,795

 

Shanghai Pharmaceuticals Holding Co., Ltd. H Shares (a) 

 

13,771,100

 

23,237

 

 

 

 

 

33,035

 

Hotels, Restaurants & Leisure (1.4%)

 

 

 

 

 

China CYTS Tours Holding Co., Ltd., Class A

 

4,898,241

 

6,647

 

 

 

 

 

 

 

Independent Power & Renewable Electricity Producers (18.2%)

 

 

 

 

 

China Yangtze Power Co., Ltd., Class A

 

19,257,807

 

46,832

 

Guangxi Guiguan Electric Power Co., Ltd., Class A

 

25,694,048

 

16,527

 

Huaneng Lancang River Hydropower, Inc., Class A

 

44,531,124

 

22,734

 

 

 

 

 

86,093

 

Insurance (4.1%)

 

 

 

 

 

China Pacific Insurance Group Co., Ltd., Class A

 

984,115

 

3,875

 

China Pacific Insurance Group Co., Ltd. H Shares (a) 

 

5,201,000

 

15,573

 

 

 

 

 

19,448

 

 

 

Interactive Media & Services (1.5%)

 

 

 

 

 

Baidu, Inc. ADR (b) 

 

71,200

 

7,176

 

 

 

 

 

 

 

Media (2.1%)

 

 

 

 

 

Shandong Publishing & Media Co. Ltd., Class A

 

10,967,123

 

9,956

 

 

 

 

 

 

 

Metals & Mining (1.4%)

 

 

 

 

 

Zhaojin Mining Industry Co., Ltd. H Shares (a) 

 

6,766,500

 

6,800

 

 

 

 

 

 

 

Personal Products (3.7%)

 

 

 

 

 

Shanghai Jahwa United Co., Ltd., Class A

 

4,965,375

 

17,442

 

 

 

 

 

 

 

Pharmaceuticals (23.8%)

 

 

 

 

 

Beijing Tongrentang Co., Ltd., Class A

 

3,410,633

 

12,094

 

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd., Class A

 

10,823,005

 

42,103

 

Mayinglong Pharmaceutical Group Co. Ltd., Class A

 

6,704,638

 

14,035

 

Yunnan Baiyao Group Co., Ltd., Class A

 

3,679,830

 

44,093

 

 

 

 

 

112,325

 

Real Estate Management & Development (5.2%)

 

 

 

 

 

China Merchants Shekou Industrial Zone Holdings Co., Ltd., Class A

 

7,254,715

 

16,711

 

Huafa Industrial Co., Ltd. Zhuhai, Class A

 

8,668,046

 

7,794

 

 

 

 

 

24,505

 

Road & Rail (0.6%)

 

 

 

 

 

Daqin Railway Co., Ltd., Class A

 

3,046,900

 

2,908

 

 

 

 

 

 

 

Semiconductors & Semiconductor Equipment (1.0%)

 

 

 

 

 

Will Semiconductor Ltd., Class A

 

216,183

 

4,679

 

 

 

 

 

 

 

Software (3.5%)

 

 

 

 

 

Beijing Thunisoft Corp., Ltd., Class A

 

4,617,819

 

16,607

 

 

 

 

 

 

 

Transportation Infrastructure (1.6%)

 

 

 

 

 

Shenzhen Airport Co., Ltd., Class A

 

7,096,035

 

7,583

 

Total Common Stocks (Cost $500,471)

 

 

 

462,510

 

 

 

 

 

 

 

Short-Term Investment (0.0%)

 

 

 

 

 

Investment Company (0.0%)

 

 

 

 

 

Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (c) (Cost $80)

 

80,385

 

80

 

Total Investments (97.8%) (Cost $500,551) (d)(e)(f)

 

 

 

462,590

 

Other Assets in Excess of Liabilities (2.2%)

 

 

 

10,333

 

Net Assets (100.0%)

 

 

 

$

472,923

 

 

(a)                                 Security trades on the Hong Kong exchange.

(b)                                 Non-income producing security.

(c)                                  The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio - (the “Liquidity Funds”), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the three months ended March 31, 2020, advisory fees paid were reduced by approximately $1,000 relating to the Fund’s investment in the Liquidity Funds.

 

 

(d)                                 The approximate fair value and percentage of net assets, $455,334,000 and 96.3%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in the Notes to the Portfolio of Investments.

(e)                                  The Fund is permitted to purchase and sell securities (“cross-trade”) from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the “Rule”). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the three months ended March 31, 2020, the Fund did not engage in any cross-trade transactions.

(f)                                   At March 31, 2020, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $11,363,000 and the aggregate gross unrealized depreciation is approximately $49,324,000, resulting in net unrealized depreciation of approximately $37,961,000.

 

ADR                     American Depositary Receipt.

 

 

Portfolio Composition

 

Classification

 

Percentage of
Total Investments

 

Other*

 

37.3

%

Pharmaceuticals

 

24.3

 

Independent Power & Renewable Electricity Producers

 

18.6

 

Banks

 

7.4

 

Health Care Providers & Services

 

7.1

 

Real Estate Management & Development

 

5.3

 

Total Investments

 

100.0

%

 

*            Industries and/or investment types representing less than 5% of total investments.

 

 

Morgan Stanley China A Share Fund, Inc.

 

Notes to the Portfolio of Investments · March 31, 2020 (unaudited)

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820) - Disclosures Framework - Changes to Disclosure Requirements of Fair Value Measurement (“ASU 2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13 as permitted by the standard. The impact of the Fund’s adoption was limited to changes in the Fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, when applicable.

 

Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. If only bid prices are available then the latest bid price may be used. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter (“OTC”) market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers; (3) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Fund’s Board of Directors (the “Directors”). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available in the relevant exchanges. If Morgan Stanley Investment Management Inc. (the “Adviser”), a wholly-owned subsidiary of Morgan Stanley, determines that the price provided by the outside pricing service/vendor or exchange does not reflect the security’s fair value or is unable to provide a price, prices from brokers or dealers may also be utilized. In these circumstances, the value of the security will be the mean of bid and asked prices obtained from brokers or dealers;  (4) when market quotations are not readily available, including circumstances under which the Adviser determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Directors. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange (“NYSE”).  If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day.

 

 

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund’s Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the Directors. Under procedures approved by the Directors, the Fund’s Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund’s valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

 

Fair Value Measurement: FASB Accounting Standards CodificationTM (“ASC”) 820, “Fair Value Measurement” (“ASC 820”), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below:

 

· Level 1 — unadjusted quoted prices in active markets for identical investments

 

· Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

· Level 3 — significant unobservable inputs including the Fund’s own assumptions in determining the fair value of investments.  Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

 

 

The following is a summary of the inputs used to value the Fund’s investments as of March 31, 2020:

 

Investment Type

 

Level 1
Unadjusted
quoted
prices
(000)

 

Level 2
Other
significant
observable
inputs
(000)

 

Level 3
Significant
unobservable
inputs
(000)

 

Total
(000)

 

Assets:

 

 

 

 

 

 

 

 

 

Common Stocks

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

—

 

$

7,102

 

$

—

 

$

7,102

 

Banks

 

—

 

33,978

 

—

 

33,978

 

Beverages

 

—

 

2,793

 

—

 

2,793

 

Capital Markets

 

—

 

8,829

 

—

 

8,829

 

Commercial Services & Supplies

 

—

 

3,799

 

—

 

3,799

 

Electrical Equipment

 

—

 

8,909

 

—

 

8,909

 

Electronic Equipment, Instruments & Components

 

—

 

10,419

 

—

 

10,419

 

Food Products

 

—

 

17,522

 

—

 

17,522

 

Gas Utilities

 

—

 

13,955

 

—

 

13,955

 

Health Care Providers & Services

 

—

 

33,035

 

—

 

33,035

 

Hotels, Restaurants & Leisure

 

—

 

6,647

 

—

 

6,647

 

Independent Power & Renewable Electricity Producers

 

—

 

86,093

 

—

 

86,093

 

Insurance

 

—

 

19,448

 

—

 

19,448

 

Interactive Media & Services

 

7,176

 

—

 

—

 

7,176

 

Media

 

—

 

9,956

 

—

 

9,956

 

Metals & Mining

 

—

 

6,800

 

—

 

6,800

 

Personal Products

 

—

 

17,442

 

—

 

17,442

 

Pharmaceuticals

 

—

 

112,325

 

—

 

112,325

 

Real Estate Management & Development

 

—

 

24,505

 

—

 

24,505

 

Road & Rail

 

—

 

2,908

 

—

 

2,908

 

Semiconductors & Semiconductor Equipment

 

—

 

4,679

 

—

 

4,679

 

Software

 

—

 

16,607

 

—

 

16,607

 

Transportation Infrastructure

 

—

 

7,583

 

—

 

7,583

 

Total Common Stocks

 

7,176

 

455,334

 

—

 

462,510

 

Short-Term Investment

 

 

 

 

 

 

 

 

 

Investment Company

 

80

 

—

 

—

 

80

 

Total Assets

 

$

7,256

 

$

455,334

 

$

—

 

$

462,590

 

 

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.