N-Q 1 d173662dnq.htm JPMORGAN CHINA REGION FUND, INC. JPMorgan China Region Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-06686

 

 

JPMorgan China Region Fund, Inc.

(Exact name of registrant as specified in charter)

One Beacon Street, 18th Floor

Boston, MA 02108

(Address of principal executive offices) (Zip code)

Dechert LLP

1095 Avenue of the Americas

New York, NY 10036

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 441 9800

Date of fiscal year end: December 31

Date of reporting period: March 31, 2016


ITEM 1. SCHEDULE OF INVESTMENTS.

The Schedule(s) of Investments is attached herewith.


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT MARCH 31, 2016 (Unaudited)

 

DESCRIPTION

   HOLDINGS
(IN  SHARES)
     VALUE
(IN US$)
 

COMMON STOCK

     

CHINA (62.1%)

     

Aerospace & Defense (0.4%)

     

Avic Aviation Engine Corp. plc, ‘A’

     74,801         456,721   
     

 

 

 

Airlines (0.9%)

     

Spring Airlines Co., Ltd., ‘A’

     135,129         969,863   
     

 

 

 

Automobiles (1.1%)

     

Chongqing Changan Automobile Co., Ltd., ‘A’

     493,602         1,203,554   
     

 

 

 

Banks (11.0%)

     

China Construction Bank Corp.

     8,213,000         5,240,752   

China Merchants Bank Co., Ltd.

     1,828,000         3,841,054   

Industrial Bank Co., Ltd., ‘A’

     1,199,000         2,879,039   
     

 

 

 
        11,960,845   
     

 

 

 

Beverages (1.0%)

     

Kweichow Moutai Co., Ltd., ‘A’

     29,580         1,132,598   
     

 

 

 

Capital Markets (1.9%)

     

Huatai Securities Co., Ltd., ‘A’

     781,250         2,066,792   
     

 

 

 

Chemicals (1.1%)

     

Jiangsu Kangde Xin Composite Material Co., Ltd., ‘A’

     233,697         1,192,044   
     

 

 

 

Commercial Services & Supplies (0.5%)

     

Beijing Originwater Technology Co., Ltd., ‘A’

     86,100         519,055   
     

 

 

 

Construction & Engineering (1.8%)

     

China Communications Construction Co., Ltd.

     1,661,000         1,984,888   
     

 

 

 

Diversified Consumer Services (0.9%)

     

China Maple Leaf Educational Systems Ltd.

     1,582,000         1,003,363   
     

 

 

 

Diversified Telecommunication Services (2.7%)

     

China Telecom Corp., Ltd.

     5,456,000         2,883,665   
     

 

 

 

Electronic Equipment, Instruments & Components (3.3%)

     

AAC Technologies Holdings, Inc.

     297,000         2,270,376   

Hangzhou Hikvision Digital Technology Co., Ltd., ‘A’

     285,580         1,360,872   
     

 

 

 
        3,631,248   
     

 

 

 

Health Care Providers & Services (0.8%)

     

Phoenix Healthcare Group Co., Ltd.

     787,000         871,474   
     

 

 

 

Hotels, Restaurants & Leisure (2.2%)

     

China CYTS Tours Holding Co., Ltd., ‘A’

     286,200         924,411   

Wynn Macau Ltd. (a)

     937,600         1,450,392   
     

 

 

 
        2,374,803   
     

 

 

 

Independent Power & Renewable Electricity Producers (0.2%)

     

China Longyuan Power Group Corp., Ltd.

     303,000         224,203   
     

 

 

 

Insurance (5.4%)

     

PICC Property & Casualty Co., Ltd.

     694,000         1,272,172   

Ping An Insurance Group Co. of China Ltd., ‘A’

     924,252         4,545,806   
     

 

 

 
        5,817,978   
     

 

 

 

Internet & Catalog Retail (1.2%)

     

JD.com, Inc. (a)

     48,000         1,272,000   
     

 

 

 

Internet Software & Services (10.8%)

     

Alibaba Group Holding Ltd. (a)

     24,700         1,952,041   

Tencent Holdings Ltd.

     390,200         7,967,628   

Wangsu Science & Technology Co., Ltd., ‘A’

     196,291         1,772,738   
     

 

 

 
        11,692,407   
     

 

 

 

Leisure Products (1.0%)

     

Guangdong Alpha Animation and Culture Co., Ltd., ‘A’

     163,925         1,031,818   
     

 

 

 

Machinery (2.2%)

     

China Conch Venture Holdings Ltd.

     619,000         1,220,868   

Han’s Laser Technology Industry Group Co., Ltd., ‘A’

     350,104         1,204,436   
     

 

 

 
        2,425,304   
     

 

 

 

Media (1.0%)

     

Zhejiang Huace Film & TV Co., Ltd., ‘A’

     263,950         1,085,576   
     

 

 

 

Oil, Gas & Consumable Fuels (3.2%)

     

China Petroleum & Chemical Corp.

     1,263,400         828,982   

CNOOC Ltd.

     2,217,000         2,617,868   
     

 

 

 
        3,446,850   
     

 

 

 

Pharmaceuticals (0.9%)

     

Jiangsu Hengrui Medicine Co., Ltd., ‘A’

     132,594         968,275   
     

 

 

 

Real Estate Management & Development (4.4%)

     

China Vanke Co., Ltd.

     1,148,200         2,815,235   

Poly Real Estate Group Co., Ltd., ‘A’

     1,363,650         1,956,626   
     

 

 

 
        4,771,861   
     

 

 

 

Road & Rail (0.8%)

     

CAR, Inc. (a)

     785,000         920,869   
     

 

 

 

Software (0.3%)

     

Aisino Co., Ltd., ‘A’

     42,500         347,026   
     

 

 

 

Specialty Retail (1.0%)

     

China Harmony New Energy Auto Holding Ltd.

     2,073,500         1,098,582   
     

 

 

 

Trading Companies & Distributors (0.1%)

     

Xiamen C & D, Inc., ‘A’

     73,208         132,774   
     

 

 

 

TOTAL CHINA

            67,486,436   
     

 

 

 

HONG KONG (29.5%)

     

Auto Components (0.8%)

     

Nexteer Automotive Group Ltd.

     831,000         854,851   
     

 

 

 

Banks (2.8%)

     

BOC Hong Kong Holdings Ltd.

     672,500         2,006,919   

Dah Sing Banking Group Ltd.

     602,800         1,058,369   
     

 

 

 
        3,065,288   
     

 

 

 

Commercial Services & Supplies (1.1%)

     

China Everbright International Ltd.

     1,073,000         1,197,855   
     

 

 

 

Communications Equipment (0.9%)

     

VTech Holdings Ltd.

     81,200         964,056   
     

 

 

 

Diversified Financial Services (2.3%)

     

Hong Kong Exchanges and Clearing Ltd.

     101,354         2,440,644   
     

 

 

 

Gas Utilities (1.6%)

     

China Resources Gas Group Ltd.

     594,000         1,696,082   
     

 

 

 

Household Durables (1.6%)

     

Man Wah Holdings Ltd.

     762,400         965,119   

Techtronic Industries Co., Ltd.

     198,500         784,292   
     

 

 

 
        1,749,411   
     

 

 

 


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT MARCH 31, 2016 (Unaudited) (continued)

 

DESCRIPTION

   HOLDINGS
(IN  SHARES)
     VALUE
(IN US$)
 

COMMON STOCK — continued

     

Industrial Conglomerates (2.9%)

     

CK Hutchison Holdings Ltd.

     184,000         2,388,547   

Shun Tak Holdings Ltd.

     2,256,000         747,410   
     

 

 

 
        3,135,957   
     

 

 

 

Insurance (5.8%)

     

AIA Group Ltd.

     866,600         4,909,804   

China Taiping Insurance Holdings Co., Ltd. (a)

     617,000         1,355,319   
     

 

 

 
        6,265,123   
     

 

 

 

Pharmaceuticals (1.5%)

     

Sino Biopharmaceutical Ltd.

     2,223,000         1,667,819   
     

 

 

 

Real Estate Management & Development (4.5%)

     

Cheung Kong Property Holdings Ltd.

     383,500         2,469,377   

New World Development Co., Ltd.

     1,038,053         988,896   

Sun Hung Kai Properties Ltd.

     114,000         1,393,891   
     

 

 

 
        4,852,164   
     

 

 

 

Textiles, Apparel & Luxury Goods (1.5%)

     

Pacific Textiles Holdings Ltd.

     424,000         612,168   

Regina Miracle International Holdings Ltd. (a) (e)

     723,000         1,055,046   
     

 

 

 
        1,667,214   
     

 

 

 

Water Utilities (0.5%)

     

Beijing Enterprises Water Group Ltd. (a)

     922,000         577,635   
     

 

 

 

Wireless Telecommunication Services (1.7%)

     

China Mobile Ltd.

     165,500         1,844,377   
     

 

 

 

TOTAL HONG KONG

        31,978,476   
     

 

 

 

TAIWAN (16.9%)

     

Banks (1.4%)

     

E.Sun Financial Holding Co., Ltd.

     2,768,833         1,548,564   
     

 

 

 

Diversified Financial Services (1.2%)

     

Fubon Financial Holding Co., Ltd.

     1,040,989         1,326,142   
     

 

 

 

Electronic Equipment, Instruments & Components (1.5%)

     

Largan Precision Co., Ltd.

     21,000         1,627,983   
     

 

 

 

Food & Staples Retailing (1.3%)

     

President Chain Store Corp.

     190,000         1,384,383   
     

 

 

 

Semiconductors & Semiconductor Equipment (10.1%)

     

Advanced Semiconductor Engineering, Inc.

     1,647,802         1,917,418   

Silicon Motion Technology Corp.

     23,205         900,586   

Taiwan Semiconductor Manufacturing Co., Ltd.

     1,606,057         8,084,180   
     

 

 

 
        10,902,184   
     

 

 

 

Technology Hardware, Storage & Peripherals (1.4%)

     

Catcher Technology Co., Ltd.

     189,000         1,550,336   
     

 

 

 

TOTAL TAIWAN

        18,339,592   
     

 

 

 

RIGHT

     

Financials — 0.0%

     

Fubon Financial Holding, expiring 04/13/16 (a)

     50,260           
     

 

 

 

TOTAL INVESTMENTS

(108.5% of Net Assets)

(Cost $106,546,856)

        117,804,504   
     

 

 

 

Liabilities in excess of other assets

(-8.5% of Net Assets)

        (9,205,134
     

 

 

 

NET ASSETS (100.0%)

      $ 108,599,370   
     

 

 

 

 


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT MARCH 31, 2016 (Unaudited) (continued)

 

As of March 31, 2016, aggregate cost for Federal income tax purposes was $106,546,856. The aggregate unrealized gain for all securities is as follows:

 

Excess of market value over cost

     19,428,908   

Excess of cost over market value

     (8,171,260
  

 

 

 

Net unrealized gain

     11,257,648   
  

 

 

 

 

 

NOTES TO SCHEDULE OF PORTFOLIO INVESTMENTS:

 

(a) Non-income producing security.
(e) Security is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. Unless otherwise indicated, this security has been determined to be liquid under procedures established by the Board of Directors and may be resold in transactions exempt from registration, normally to qualified institutional buyers.
A China A shares.

A.        Valuation of Investments – All securities for which market quotations are readily available are valued at the last sales price prior to the time of determination or, if no sales price is available at that time, at the mean between the last current bid and ask prices. Securities that are traded over-the-counter are valued, if bid and ask quotations are available, at the mean between the current bid and ask prices. Certain investments of the Fund may, depending upon market conditions, trade in relatively thin markets and/or in markets that experience significant volatility. As a result of these conditions, the prices used by the Fund to value securities may differ from the value that would be realized if these securities were sold and the differences could be material. All other securities and assets are valued at fair value as determined in good faith by the Board of Directors. It is possible that the estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and such differences could be material. In valuing the Fund’s assets, quotations of foreign securities in a foreign currency are translated to United States dollar equivalents at the prevailing exchange rate in effect on the valuation date. Investments in open ended mutual funds are valued at current day’s closing net asset value per share.

JF International Management Inc. (the Investment ‘Advisor’), an indirect wholly-owned subsidiary of JPMorgan Chase & Co. has established the Asian Fair Valuation Committee (“AFVC”) to assist the Board with the oversight and monitoring of the valuation of the Fund’s investments. The Advisor implements the valuation policies for the valuation of investments, as directed by the Board. The AFVC oversees and carries out the policies for the valuation of investments held in the Fund. This includes monitoring the appropriateness of fair values based on results of ongoing valuation oversight, including but not limited to consideration of macro or security specific events, market events and pricing vendor and broker due diligence. The Advisor is responsible for discussing and assessing the potential impacts of the fair values on an ongoing basis, and at least on a quarterly basis with the AFVC and the Board.

Valuations reflected in this report are as of the report date. As a result, changes in valuation due to market events and/or issuer related events after the report date and prior to issuance of the report are not reflected herein.

The various inputs that are used in determining the valuation of the Fund’s investments are summarized into the three broad levels listed below.

 

 

Level 1 – Unadjusted inputs using quoted prices in active markets for identical investments.

 

Level 2 – Other significant observable inputs including, but not limited to, quoted prices for similar investments, inputs other than quoted prices that are observable for investments (such as interest rates, prepayment speeds, credit risk, etc.) or other market corroborated inputs.

 

Level 3 – Significant inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s assumptions in determining the fair value of investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input, both individually and in the aggregate, that is significant to the fair value measurement. The inputs or methodology used for valuing instruments are not necessarily an indication of the risk associated with investing in those instruments.

 


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT MARCH 31, 2016 (Unaudited) (continued)

 

The following table represents each valuation input as presented on the Schedule of Portfolio Investments (“SOI”):

 

     Level 1
Quoted prices
    Level 2
Other significant
observable inputs
     Level 3
Significant
unobservable inputs
     Total  

Investments in Securities

          

Common Stocks

          

China

   $ 67,006,636      $  —       $ 479,800       $ 67,486,436   

Hong Kong

     31,978,476                        31,978,476   

Taiwan

     18,339,592                        18,339,592   
  

 

 

   

 

 

    

 

 

    

 

 

 

Total Common Stocks

     117,324,704                479,800         117,804,504   
  

 

 

   

 

 

    

 

 

    

 

 

 

Right

          

Taiwan

     (a)                      (a) 
  

 

 

   

 

 

    

 

 

    

 

 

 

Total Investments in Securities

   $ 117,324,704      $       $ 479,800       $ 117,804,504   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

(a) Value is zero.

Transfers from level 2 to level 1 in the amount of approximately $3,392,724 are due to a stock resumed trading during the period ended March 31, 2016.

The following is a summary of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

 

    Balance as of
December 31,
2015
    Realized
gain
(loss)
    Change in
unrealized
appreciation
(depreciation)
    Net accretion
(amortization)
    Purchases1     Sales2     Transfers
into
Level 3
    Transfers
out of
Level 3
    Balance as of
March  31,

2016
 

Investments in Securities

  

China

                 

Common
Stocks — Software

  $ 382,353      $      $ (35,327   $      $      $      $      $      $ 347,026   

Common
Stocks — Trading Companies & Distributors

    158,172               (25,398                                        132,774   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 540,525      $      $ (60,725   $      $      $      $      $      $ 479,800   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1 

Purchases include all purchases of securities and securities received in corporate actions.

2 

Sales include all sales of securities, maturities, paydowns and securities tendered in corporate actions.

Transfers between fair value levels are valued utilizing values as of the beginning of the period.

The changes in unrealized appreciation (depreciation) attributable to securities owned at March 31, 2016, which were valued using significant unobservable inputs (level 3) amounted to approximately $(60,725).

 


ITEM 2. CONTROLS AND PROCEDURES.

 

  (a) The registrant’s principal executive and principal financial officers have concluded based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the registrant on Form N-Q is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the registrant in the reports that it files or submits on Form N-Q is accumulated and communicated to the registrant’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding disclosure.

 

  (b) There were no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 3. EXHIBITS.

 

  (a) Certifications pursuant to Rule 30a-2(a) under the 1940 Act, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

JPMorgan China Region Fund, Inc.
/s/ Simon Crinage
Simon Crinage
Director, President and Principal Executive Officer of the JPMorgan China Region Fund, Inc
May 26, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

/s/ Simon Crinage
Simon Crinage
Director, President and Principal Executive Officer of the JPMorgan China Region Fund, Inc
May 26, 2016
/s/ Neil Martin
Neil S. Martin
Treasurer and Chief Operating Officer of the JPMorgan China Region Fund, Inc.
May 26, 2016