Quatre raisons d’envisager de minimiser l’exposition aux actions chinoises

Q2 2024 VIEWPOINT : CHINA AND TOBAM LBRTY ® FOUR REASONS TO CONSIDER MINIMIZING EXPOSURE TO CHINESE EQUITY 1. REASONS WHY CHINA COULD UNDERPERFORM IN THE SHORT TERM 1. Net Foreign Direct Investment (FDI) to China turned negative China’s Net Foreign Direct Investments -$20bn $0bn $20bn $40bn $60bn $80bn $100bn $120bn 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: TOBAM and Bloomberg. 2. CHINESE ECONOMY IS UNDERGOING A LONG - LASTING ECONOMIC SLOW DOWN 1. Real Estate (20% of Chinese GDP) debt deflation spiral is still ongoing 2. Exports struggle to make up for it: in 2023 Chinese overall exports fell by - 4.6% even though trade with the sanctioned Russia increased by +47% - certainly a one off " How many vacant homes are there now? Each expert gives a very different number, with the most extreme believing the current number of vacant homes are enough for 3 billion people “ He Keng, 81, former deputy head of the Chinese statistics bureau 2. China share of US imports has been dramatically falling since 2019 3. Bipartisan opposition to China’s policies is a prevailing stance in current U. S. p olitics – this year’s elections could further amplify this sentiment Source: TOBAM and Bloomberg. This material is provided for information purposes only and does not constitute a recommendation, solicitation, offer, advice or invitation to enter in any transaction and should in no case be interpreted as su ch.

3. CHINA HAS THE LOWEST CIVIL AND DEMOCRATIC RIGHTS RATING OF ALL MSCI ACWI COUNTRIES Source: TOBAM China has the lowest ‘TOBAM Civil and Democratic Rights’ (CD) rating of all countries that belong to the MSCI ACWI . This rating is unlikely to materially change in the short to medium term . TOBAM’s research has established that exposure to low CD rating countries is not rewarded over time . CONCLUSIONS: • Investors should think twice about allocating to Chinese equities given these economic and political considerations. • In addition, they should also take into account China’s ‘Civil and Democratic Rights’ (CD) rating, as there is an ex - post relationship with returns to investors in public equity and a low CD rating. Since 2022 , China's population has been declining, despite a more accommodating family policy ending the one - child policy . In contrast, India's demography is growing, surpassing the growth rate China since 2023 . 4. CHINA’S POPULATION FACES MEANINFUL, STRUCTURAL DECLINE This material is provided for information purposes only and does not constitute a recommendation, solicitation, offer, advice or invitation to enter in any transaction and should in no case be interpreted as such.