N-Q 1 d269140dnq.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: September 30, 2016

 

 

 


ITEM 1. SCHEDULE OF INVESTMENTS.

The Schedule(s) of Investments is attached herewith.


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT SEPTEMBER 30, 2016 (Unaudited)

 

DESCRIPTION

   HOLDINGS
(IN SHARES)
     VALUE
(IN US$)
 

COMMON STOCK

     

CHINA (60.7%)

     

Aerospace & Defense (0.5%)

     

Avic Aviation Engine Corp. plc, ‘A’

     119,601         615,219   
     

 

 

 

Airlines (0.8%)

     

Spring Airlines Co., Ltd., ‘A’

     148,529         1,005,855   
     

 

 

 

Automobiles (0.8%)

     

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

     395,502         941,022   
     

 

 

 

Banks (10.1%)

     

China Construction Bank Corp.

     7,980,000         5,915,760   

China Merchants Bank Co., Ltd.

     1,891,500         4,765,086   

Industrial Bank Co., Ltd., ‘A’

     366,100         876,554   

Postal Savings Bank of China Co., Ltd. (a) (e)

     1,332,000         819,148   
     

 

 

 
        12,376,548   
     

 

 

 

Beverages (1.1%)

     

Kweichow Moutai Co., Ltd., ‘A’

     29,580         1,321,166   
     

 

 

 

Capital Markets (0.7%)

     

Huatai Securities Co., Ltd., ‘A’

     327,150         880,411   
     

 

 

 

Chemicals (1.0%)

     

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

     467,063         1,266,042   
     

 

 

 

Commercial Services & Supplies (1.0%)

     

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

     432,718         1,200,841   
     

 

 

 

Construction & Engineering (0.3%)

     

China Machinery Engineering Corp.

     694,000         406,214   
     

 

 

 

Diversified Telecommunication Services (2.1%)

     

China Telecom Corp., Ltd.

     4,984,000         2,512,434   
     

 

 

 

Electrical Equipment (1.1%)

     

Guoxuan High-Tech Co. Ltd.

     106,400         528,012   

Luxshare Precision Industry Co., Ltd., ‘A’

     259,913         787,922   
     

 

 

 
        1,315,934   
     

 

 

 

Electronic Equipment, Instruments & Components (4.1%)

     

AAC Technologies Holdings, Inc.

     232,500         2,336,570   

GoerTek, Inc., ‘A’

     234,800         1,064,169   

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

     428,370         1,571,546   
     

 

 

 
        4,972,285   
     

 

 

 

Health Care Providers & Services (1.4%)

     

Phoenix Healthcare Group Co., Ltd.

     988,500         1,756,167   
     

 

 

 

Hotels, Restaurants & Leisure (3.0%)

     

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

     339,300         1,040,791   

Tuniu Corp. (a)

     69,000         698,280   

Wynn Macau Ltd.

     1,143,200         1,892,462   
     

 

 

 
        3,631,533   
     

 

 

 

Household Durables (1.0%)

     

Hangzhou Robam Appliances Co., Ltd., ‘A’

     200,350         1,239,647   
     

 

 

 

Independent Power & Renewable Electricity Producers (1.0%)

     

CGN Power Co., Ltd. (e)

     3,973,000         1,172,989   
     

 

 

 

Insurance (4.7%)

     

PICC Property & Casualty Co., Ltd.

     694,000         1,148,853   

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

     901,152         4,615,195   
     

 

 

 
        5,764,048   
     

 

 

 

Internet & Direct Marketing Retail (1.2%)

     

JD.com, Inc. (a)

     58,400         1,523,656   
     

 

 

 

Internet Software & Services (15.2%)

     

Alibaba Group Holding Ltd. (a)

     63,300         6,696,507   

Tencent Holdings Ltd.

     356,600         9,792,661   

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

     196,291         2,054,140   
     

 

 

 
        18,543,308   
     

 

 

 

Leisure Products (0.6%)

     

Alpha Group, ‘A’

     163,925         687,649   
     

 

 

 

Machinery (1.9%)

     

China Conch Venture Holdings Ltd.

     557,500         1,086,767   

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

     398,204         1,274,014   
     

 

 

 
        2,360,781   
     

 

 

 

Media (0.7%)

     

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

     422,320         863,635   
     

 

 

 

Oil, Gas & Consumable Fuels (2.7%)

     

CNOOC Ltd.

     2,666,000         3,306,549   
     

 

 

 

Pharmaceuticals (0.9%)

     

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

     165,593         1,093,609   
     

 

 

 

Real Estate Management & Development (2.0%)

     

KWG Property Holding Ltd.

     679,500         445,910   

Poly Real Estate Group Co., Ltd., ‘A’

     1,363,650         1,962,675   
     

 

 

 
        2,408,585   
     

 

 

 

Specialty Retail (0.8%)

     

China Harmony New Energy Auto Holding Ltd.

     2,073,500         1,005,152   
     

 

 

 

TOTAL CHINA

            74,171,279   
     

 

 

 

HONG KONG (28.4%)

     

Auto Components (1.3%)

     

Nexteer Automotive Group Ltd.

     1,208,000         1,572,998   
     

 

 

 

Automobiles (0.6%)

     

Brilliance China Automotive Holdings Ltd.

     630,000         706,642   
     

 

 

 

Banks (2.6%)

     

BOC Hong Kong Holdings Ltd.

     596,000         2,013,202   

Dah Sing Banking Group Ltd.

     647,200         1,159,827   
     

 

 

 
        3,173,029   
     

 

 

 

Commercial Services & Supplies (1.0%)

     

China Everbright International Ltd.

     1,073,000         1,275,471   
     

 

 

 

Diversified Financial Services (2.2%)

     

Hong Kong Exchanges and Clearing Ltd.

     104,281         2,739,991   
     

 

 

 

Gas Utilities (1.7%)

     

China Resources Gas Group Ltd.

     594,000         2,029,421   
     

 

 

 

Household Durables (1.5%)

     

Man Wah Holdings Ltd.

     1,342,400         860,158   

Techtronic Industries Co., Ltd.

     236,000         921,922   
     

 

 

 
        1,782,080   
     

 

 

 

Industrial Conglomerates (2.3%)

     

CK Hutchison Holdings Ltd.

     164,000         2,084,782   

Shun Tak Holdings Ltd.

     2,256,000         727,141   
     

 

 

 
        2,811,923   
     

 

 

 

Insurance (5.4%)

     

AIA Group Ltd.

     809,000         5,376,715   

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

     617,000         1,217,072   
     

 

 

 
        6,593,787   
     

 

 

 


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT SEPTEMBER 30, 2016 (Unaudited) (continued)

 

DESCRIPTION

   HOLDINGS
(IN SHARES)
     VALUE
(IN US$)
 

COMMON STOCK— continued

     

Media (0.7%)

     

IMAX China Holding, Inc. (a) (e)

     177,500         869,605   
     

 

 

 

Pharmaceuticals (1.1%)

     

Sino Biopharmaceutical Ltd.

     1,974,000         1,325,942   
     

 

 

 

Real Estate Management & Development (5.9%)

     

Cheung Kong Property Holdings Ltd.

     383,500         2,798,476   

China Resources Land Ltd.

     436,000         1,214,171   

Sun Hung Kai Properties Ltd.

     136,000         2,053,221   

Wharf Holdings Ltd. (The)

     151,000         1,098,957   
     

 

 

 
        7,164,825   
     

 

 

 

Textiles, Apparel & Luxury Goods (1.6%)

     

Pacific Textiles Holdings Ltd.

     426,000         552,519   

Regina Miracle International Holdings Ltd. (e)

     1,073,000         1,466,376   
     

 

 

 
        2,018,895   
     

 

 

 

Water Utilities (0.5%)

     

Beijing Enterprises Water Group Ltd.

     922,000         622,877   
     

 

 

 

TOTAL HONG KONG

        34,687,486   
     

 

 

 

SINGAPORE (0.7%)

     

Trading Companies & Distributors (0.7%)

     

BOC Aviation Ltd. (e)

     161,800         832,322   
     

 

 

 

TAIWAN (16.5%)

     

Banks (1.5%)

     

E.Sun Financial Holding Co., Ltd.

     3,162,816         1,801,096   
     

 

 

 

Communications Equipment (0.5%)

     

Wistron NeWeb Corp.

     212,180         669,461   
     

 

 

 

Electronic Equipment, Instruments & Components (2.1%)

     

Largan Precision Co., Ltd.

     21,000         2,532,421   
     

 

 

 

Food & Staples Retailing (1.2%)

     

President Chain Store Corp.

     190,000         1,509,308   
     

 

 

 

Insurance (0.4%)

     

China Life Insurance Co., Ltd.

     521,000         476,197   
     

 

 

 

Semiconductors & Semiconductor Equipment (10.3%)

     

Advanced Semiconductor Engineering, Inc.

     1,203,802         1,444,002   

Himax Technologies, Inc.

     76,643         658,363   

Silicon Motion Technology Corp.

     23,205         1,201,787   

Taiwan Semiconductor Manufacturing Co., Ltd.

     1,606,057         9,350,797   
     

 

 

 
        12,654,949   
     

 

 

 

Technology Hardware, Storage & Peripherals (0.5%)

     

Catcher Technology Co., Ltd.

     74,000         600,820   
     

 

 

 

TOTAL TAIWAN

        20,244,252   
     

 

 

 

TOTAL INVESTMENTS

(106.3% of Net Assets)

(Cost $105,493,561)

        129,935,339   
     

 

 

 

Liabilities in excess of other assets

(-6.3% of Net Assets)

        (7,726,591
     

 

 

 

NET ASSETS (100.0%)

      $ 122,208,748   
     

 

 

 

 


JPMorgan China Region Fund, Inc.

INVESTMENT PORTFOLIO

AT SEPTEMBER 30, 2016 (Unaudited) (continued)

 

As of September 30, 2016, aggregate cost for Federal income tax purposes was $105,493,561. The aggregate unrealized gain for all securities is as follows:

 

Excess of market value over cost

     29,526,343   

Excess of cost over market value

     (5,084,565
  

 

 

 

Net unrealized gain

     24,441,778   
  

 

 

 

 

 

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 SEPTEMBER 30, 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 (a)

   $ 129,935,339       $       $       $ 129,935,339   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Portfolio holdings designated in level 1 are disclosed individually in the Investment Portfolio. Please refer to the SOI for industry specifics of the portfolio holdings.

There were no transfers among any levels during the period ended September 30, 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
net unrealized
appreciation
(depreciation)
    Net accretion
(amortization)
     Purchases1      Sales2     Transfers
into
Level 3
     Transfers
out of
Level 3
     Balance as of
September 30,
2016
 

Investments in Securities

                       

China

                       

Common
Stocks — Software

   $ 382,353       $ 222,639      $ (211,040   $       $       $ (393,952   $       $       $   

Common
Stocks — Trading
Companies &
Distributors

     158,172         (22,367     (9,288                     (126,517                       
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 540,525       $ 200,272      $ (220,328   $       $       $ (520,469   $       $       $   
  

 

 

    

 

 

   

 

 

   

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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.

 


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

November 28, 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

November 28, 2016

 

/s/ Neil Martin

Neil S. Martin

Treasurer and Chief Operating Officer of

the JPMorgan China Region Fund, Inc.

November 28, 2016