After rebounding strongly in September, Chinese markets fell back slightly in October amid uncertainty over the application of new measures in China and the forthcoming US elections.

The markets were highly volatile, due to concerns over the US elections.

The month started with a public holiday to mark Golden Week. Nevertheless, consumer data were mixed during this festive week.

On the economic front, manufacturing indicators such as the NBS and Caixin were in the expansion territory for the first time in six months.

China unveiled an ambitious public debt plan, involving the issue of nearly €300 billion of special bonds, to revitalise its slowing economy, with a particular focus on the property and banking sectors.

Against this backdrop, the fund delivered a positive performance over the month, significantly outperforming its reference indicator.

The main contributor to performance was EHang, which saw its share price rise on the back of the success of their first eVTOL pilotless flight in Brazil and the granting of important certifications for their test flights.

Our portfolio of technology stocks also benefited the strategy, including TSMC, Daqo New Energy and Lotes.

However, we were somewhat penalised by our portfolio of consumer discretionary stocks, particularly New Oriental Education. The shares fell on the back of disappointing second-quarter revenue forecasts, although first-quarter results were better than expected.

We remain constructive on Chinese markets given the Chinese governments coordinated efforts, however we remain a cautious positioning, waiting for more clarity on the fiscal easing measures and the US presidential election results.

Although the Chinese government's recent announcements do not seem sufficient, on their own, to turn the Chinese economy around, this is a major turning point, as President Xi has shown that he is now putting the economy as a top priority.

If the rumours about the promise to recapitalise the major banks and the issue of central government bonds are indeed confirmed, this could constitute the ‘big stimulus’ that the markets have been waiting for for several months and call into question investors' extremely negative stance.

However, at this stage, we feel that it is still too early to change our medium- to long-term views on the Chinese economy. And we remain cautious given the global economic slowdown and the US presidential election. Indeed, a Trump election victory could have a negative impact on the Chinese markets.

We are closely monitoring each of our Chinese positions and their valuation, with the aim of remaining disciplined in sizing our positions. We have taken profits on some of our Chinese positions, which have rebounded strongly in recent days, and for which the valuation argument has become less attractive.

Over the month, we took profits in Beike, a property services company, as well as in Daqo New Energy, which specialises in the manufacture of components for solar panels.