Excel Chindia Fund Commentary
November 30, 2011

For the month of November, the MSCI China Index returned -6.1% and the MSCI India Index returned -14.1%, both in Canadian dollar terms.

Market Synopsis
The value of Indian and Chinese equities was negatively impacted by the continuing European sovereign debt crisis. The Fund was not immune to these factors and dropped in value during the month.   That being said, it is worth noting that China and India continue to lead the world in economic growth rates.  A rising middle class that numbers in the hundreds of millions, low sovereign debt levels and growing foreign exchange reserves, and strong corporate earnings point the way to superior investment returns for patient investors.  We encourage investors to look past short term volatility and see the growing middle class in India and China that is educated, skilled and in its prime consuming years.  This should translate into rising earnings for companies that service those new consumers.

Fund Positioning
The Fund holdings at the end of the month are about 59% in India and 38% in China with the remainder mainly in cash.  The Fund is well positioned to take advantage of the strong growth projections in the India tiger and Chinese dragon economies.

Market & Fund Outlook
Asian economies are not facing the same economic headwinds as Europe or the US in terms of high debt levels and low growth.  Because of this, valuations in Asia look incredibly cheap at the moment. The fundamental investment case for China and India remains very attractive. The recent weakness has resulted from shaky investor confidence in global markets and has driven valuations to very attractive levels. Of the world's larger economies, China and India continue to experience impressive GDP growth rates. Lessons learned during the 1998 crisis has led Asia to build up a large foreign exchange reserve and maintain a low debt-to-GDP ratio to provide a cushion for economic downturns.

 

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