NPORT-EX 2 MGGN_20567-1-D1.1-8275439.htm

 

Morgan Stanley China A Share Fund, Inc.

Portfolio of Investments

Third Quarter Report

September 30, 2019 (unaudited)

 

 

 

Shares

 

Value
(000)

 

Common Stocks (97.0%)

 

 

 

 

 

Aerospace & Defense (1.6%)

 

 

 

 

 

AECC Aviation Power Co., Ltd., Class A

 

2,576,002

 

$

7,918

 

 

 

 

 

 

 

Air Freight & Logistics (1.4%)

 

 

 

 

 

SF Holding Co. Ltd., Class A

 

1,258,246

 

6,978

 

 

 

 

 

 

 

Banks (12.0%)

 

 

 

 

 

Bank of Communications Co., Ltd., Class A

 

35,396,569

 

27,080

 

China CITIC Bank Corp., Ltd. H Shares (a) 

 

28,358,000

 

15,163

 

Industrial & Commercial Bank of China Ltd., Class A

 

24,226,700

 

18,807

 

 

 

 

 

61,050

 

Chemicals (1.7%)

 

 

 

 

 

Tangshan Sanyou Chemical Industries Co.,Ltd., Class A

 

12,088,333

 

8,770

 

 

 

 

 

 

 

Commercial Services & Supplies (1.5%)

 

 

 

 

 

Focused Photonics Hangzhou, Inc., Class A

 

3,124,500

 

7,455

 

 

 

 

 

 

 

Electrical Equipment (2.8%)

 

 

 

 

 

TBEA Co., Ltd., Class A

 

15,535,137

 

14,188

 

 

 

 

 

 

 

Food Products (1.1%)

 

 

 

 

 

Inner Mongolia Yili Industrial Group Co., Ltd., Class A

 

1,416,115

 

5,688

 

 

 

 

 

 

 

Gas Utilities (5.5%)

 

 

 

 

 

Shenzhen Gas Corp. Ltd., Class A

 

30,984,611

 

28,040

 

 

 

 

 

 

 

Health Care Providers & Services (7.8%)

 

 

 

 

 

China National Accord Medicines Corp. Ltd., Class A

 

894,316

 

5,462

 

Huadong Medicine Co. Ltd., Class A

 

2,787,768

 

10,243

 

Shanghai Pharmaceuticals Holding Co., Ltd., Class A

 

1,803,938

 

4,612

 

Shanghai Pharmaceuticals Holding Co., Ltd. H Shares (a) 

 

10,681,800

 

19,363

 

 

 

 

 

39,680

 

Hotels, Restaurants & Leisure (3.8%)

 

 

 

 

 

China CYTS Tours Holding Co., Ltd., Class A

 

11,193,021

 

19,024

 

 

 

 

 

 

 

Household Durables (2.0%)

 

 

 

 

 

Haier Smart Home Co., Ltd., Class A

 

4,802,296

 

10,340

 

 

 

 

 

 

 

Independent Power & Renewable Electricity Producers (2.9%)

 

 

 

 

 

China Yangtze Power Co., Ltd., Class A

 

988,921

 

2,530

 

Huaneng Lancang River Hydropower, Inc., Class A

 

20,687,653

 

12,272

 

 

 

 

 

14,802

 

Insurance (5.4%)

 

 

 

 

 

China Life Insurance Co., Ltd. H Shares (a) 

 

8,547,000

 

19,702

 

China Pacific Insurance Group Co., Ltd., Class A

 

1,525,915

 

7,493

 

 

 

 

 

27,195

 

Interactive Media & Services (1.9%)

 

 

 

 

 

Baidu, Inc. ADR (b) 

 

95,700

 

9,834

 

 

 

 

 

 

 

Machinery (2.1%)

 

 

 

 

 

CRRC Corp., Ltd. H Shares (a) 

 

14,867,000

 

10,404

 

 

 

Media (2.4%)

 

 

 

 

 

Qingdao Citymedia Co., Ltd., Class A

 

7,136,143

 

7,056

 

Southern Publishing & Media Co., Ltd., Class A

 

4,240,368

 

5,142

 

 

 

 

 

12,198

 

Metals & Mining (1.4%)

 

 

 

 

 

Shandong Gold Mining Co. Ltd. H Shares (a) 

 

2,949,800

 

7,247

 

 

 

 

 

 

 

Oil, Gas & Consumable Fuels (2.9%)

 

 

 

 

 

China Petroleum & Chemical Corp., Class A

 

20,939,511

 

14,764

 

 

 

 

 

 

 

Personal Products (3.3%)

 

 

 

 

 

Shanghai Jahwa United Co., Ltd., Class A

 

3,433,359

 

16,577

 

 

 

 

 

 

 

Pharmaceuticals (20.7%)

 

 

 

 

 

Beijing Tongrentang Co. Ltd., Class A

 

4,779,533

 

18,052

 

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd., Class A

 

11,812,854

 

48,386

 

Yunnan Baiyao Group Co., Ltd., Class A

 

3,644,332

 

38,845

 

 

 

 

 

105,283

 

Real Estate Management & Development (4.8%)

 

 

 

 

 

China Merchants Shekou Industrial Zone Holdings Co., Ltd., Class A

 

7,865,315

 

21,015

 

Huafa Industrial Co., Ltd. Zhuhai, Class A

 

3,305,286

 

3,268

 

 

 

 

 

24,283

 

Software (4.0%)

 

 

 

 

 

Beijing Thunisoft Corp., Ltd., Class A

 

6,716,692

 

20,481

 

 

 

 

 

 

 

Transportation Infrastructure (2.6%)

 

 

 

 

 

Jiangsu Expressway Co., Ltd., Class A

 

3,696,100

 

5,383

 

Shenzhen Airport Co., Ltd., Class A

 

5,136,125

 

7,954

 

 

 

 

 

13,337

 

Water Utilities (1.4%)

 

 

 

 

 

Grandblue Environment Co. Ltd., Class A

 

2,741,490

 

6,812

 

Total Common Stocks (Cost $524,436)

 

 

 

492,348

 

 

 

 

 

 

 

Short-Term Investment (0.7%)

 

 

 

 

 

Investment Company (0.7%)

 

 

 

 

 

Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Class (c) (Cost $3,470)

 

3,469,564

 

3,470

 

Total Investments (97.7%) (Cost $527,906) (d)(e)(f)

 

 

 

495,818

 

Other Assets in Excess of Liabilities (2.3%)

 

 

 

11,919

 

Net Assets (100.0%)

 

 

 

$

507,737

 

 

(a)

Security trades on the Hong Kong exchange.

(b)

Non-income producing security.

(c)

The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Funds - Government Portfolio - (the “Liquidity Funds”), an open-end management investment company managed by the Adviser. Advisory fees paid by the Fund are reduced by an amount equal to its pro-rata share of the advisory and administration fees paid by the Fund due to its investment in the Liquidity Funds. For the nine months ended September 30, 2019, advisory fees paid were reduced by approximately $4,000 relating to the Fund’s investment in the Liquidity Funds.

(d)

The approximate fair value and percentage of net assets, $482,514,000 and 95.0%, respectively, represent the securities that have been fair valued under the fair valuation policy for international investments as described in the Notes to the Portfolio of Investments.

 

 

(e)

The Fund is permitted to purchase and sell securities (“cross-trade”) from and to other Morgan Stanley Funds as well as other funds and client accounts for which the Adviser or an affiliate of the Adviser serves as investment adviser, pursuant to procedures approved by the Directors in compliance with Rule 17a-7 under the Act (the “Rule”). Each cross-trade is executed at the current market price in compliance with provisions of the Rule. For the nine months ended September 30, 2019, the Fund did not engage in any cross-trade transactions.

(f)

At September 30, 2019, the aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is approximately $22,831,000 and the aggregate gross unrealized depreciation is approximately $54,919,000, resulting in net unrealized depreciation of approximately $32,088,000.

 

 

ADR

American Depositary Receipt.

 

 

Portfolio Composition

 

Classification

 

Percentage of
Total Investments

 

Other*

 

47.3

%

Pharmaceuticals

 

21.2

 

Banks

 

12.3

 

Health Care Providers & Services

 

8.0

 

Gas Utilities

 

5.7

 

Insurance

 

5.5

 

Total Investments

 

100.0

%

 

*

Industries and/or investment types representing less than 5% of total investments.

 

 

Morgan Stanley China A Share Fund, Inc.

 

Notes to the Portfolio of Investments · September 30, 2019 (unaudited)

 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820) - Disclosures Framework - Changes to Disclosure Requirements of Fair Value Measurement (“ASU 2018-13”) which introduces new fair value disclosure requirements as well as eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 would be effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years; however, management has elected to early adopt ASU 2018-13 as permitted by the standard. The impact of the Fund’s adoption was limited to changes in the Fund’s financial statement disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements, when applicable.

 

Security Valuation: (1) An equity portfolio security listed or traded on an exchange is valued at its latest reported sales price (or at the exchange official closing price if such exchange reports an official closing price), and if there were no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant exchanges. Listed equity securities not traded on the valuation date with no reported bid and asked prices available on the exchange are valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (2) all other equity portfolio securities for which over-the-counter (“OTC”) market quotations are readily available are valued at the latest reported sales price (or at the market official closing price if such market reports an official closing price), and if there was no trading in the security on a given day and if there is no official closing price from relevant markets for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available on the relevant markets. An unlisted equity security that does not trade on the valuation date and for which bid and asked prices from the relevant markets are unavailable is valued at the mean between the current bid and asked prices obtained from one or more reputable brokers or dealers; (3) certain portfolio securities may be valued by an outside pricing service/vendor approved by the Fund’s Board of Directors (the “Directors”). The pricing service/vendor may employ a pricing model that takes into account, among other things, bids, yield spreads and/or other market data and specific security characteristics. Alternatively, if a valuation is not available from an outside pricing service/vendor, and the security trades on an exchange, the security may be valued at its latest reported sale price (or at the exchange official closing price if such exchange reports an official closing price), prior to the time when assets are valued. If there are no sales on a given day and if there is no official exchange closing price for that day, the security is valued at the mean between the last reported bid and asked prices if such bid and asked prices are available in the relevant exchanges; (4) when market quotations are not readily available, including circumstances under which Morgan Stanley Investment Management Inc. (the “Adviser”) or Morgan Stanley Investment Management Company (“MSIM Company”) (the “Sub-Adviser”), a wholly-owned subsidiary of Morgan Stanley, determines that the closing price, last sale price or the mean between the last reported bid and asked prices are not reflective of a security’s market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Directors. Occasionally, developments affecting the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business of the New York Stock Exchange (“NYSE”).  If developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Directors or by the Adviser using a pricing service and/or procedures approved by the Directors; (5) quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are translated into U.S. dollar equivalents at the prevailing market rates prior to the close of the NYSE; and (6) investments in mutual funds, including the Morgan Stanley Institutional Liquidity Funds, are valued at the net asset value as of the close of each business day.

 

The Directors have responsibility for determining in good faith the fair value of the investments, and the Directors may appoint others, such as the Fund’s Adviser or a valuation committee, to assist the Directors in determining fair value and to make the actual calculations pursuant to the fair valuation methodologies previously approved by the

 

 

Directors. Under procedures approved by the Directors, the Fund’s Adviser has formed a Valuation Committee whose members are approved by the Directors. The Valuation Committee provides administration and oversight of the Fund’s valuation policies and procedures, which are reviewed at least annually by the Directors. These procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

 

Fair Value Measurement: FASB Accounting Standards CodificationTM (“ASC”) 820, “Fair Value Measurement” (“ASC 820”), defines fair value as the value that the Fund would receive to sell an investment or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. ASC 820 establishes a three-tier hierarchy to distinguish between (1) inputs that reflect the assumptions market participants would use in valuing an asset or liability developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (2) inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in valuing an asset or liability developed based on the best information available in the circumstances (unobservable inputs) and to establish classification of fair value measurements for disclosure purposes. Various inputs are used in determining the value of the Fund’s investments. The inputs are summarized in the three broad levels listed below:

 

· Level 1 — unadjusted quoted prices in active markets for identical investments

 

· Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

· Level 3 — significant unobservable inputs including the Fund’s own assumptions in  determining the fair value of investments.  Factors considered in making this  determination may include, but are not limited to, information obtained by contacting  the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities),  analysis of the issuer’s financial statements or other available documents and, if  necessary, available information concerning other securities in similar circumstances.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities and the determination of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each security.

 

The following is a summary of the inputs used to value the Fund’s investments as of September 30, 2019:

 

Investment Type

 

Level 1
Unadjusted
quoted
prices
(000)

 

Level 2
Other
significant
observable
inputs
(000)

 

Level 3
Significant
unobservable
inputs
(000)

 

Total
(000)

 

Assets:

 

 

 

 

 

 

 

 

 

Common Stocks

 

 

 

 

 

 

 

 

 

Aerospace & Defense

 

$

—

 

$

7,918

 

$

—

 

$

7,918

 

Air Freight & Logistics

 

—

 

6,978

 

—

 

6,978

 

Banks

 

—

 

61,050

 

—

 

61,050

 

Chemicals

 

—

 

8,770

 

—

 

8,770

 

Commercial Services & Supplies

 

—

 

7,455

 

—

 

7,455

 

Electrical Equipment

 

—

 

14,188

 

—

 

14,188

 

Food Products

 

—

 

5,688

 

—

 

5,688

 

Gas Utilities

 

—

 

28,040

 

—

 

28,040

 

Health Care Providers & Services

 

—

 

39,680

 

—

 

39,680

 

Hotels, Restaurants & Leisure

 

—

 

19,024

 

—

 

19,024

 

Household Durables

 

—

 

10,340

 

—

 

10,340

 

Independent Power & Renewable Electricity Producers

 

—

 

14,802

 

—

 

14,802

 

Insurance

 

—

 

27,195

 

—

 

27,195

 

Interactive Media & Services

 

9,834

 

—

 

—

 

9,834

 

Machinery

 

—

 

10,404

 

—

 

10,404

 

Media

 

—

 

12,198

 

—

 

12,198

 

Metals & Mining

 

—

 

7,247

 

—

 

7,247

 

Oil, Gas & Consumable Fuels

 

—

 

14,764

 

—

 

14,764

 

Personal Products

 

—

 

16,577

 

—

 

16,577

 

Pharmaceuticals

 

—

 

105,283

 

—

 

105,283

 

Real Estate Management & Development

 

—

 

24,283

 

—

 

24,283

 

Software

 

—

 

20,481

 

—

 

20,481

 

Transportation Infrastructure

 

—

 

13,337

 

—

 

13,337

 

Water Utilities

 

—

 

6,812

 

—

 

6,812

 

Total Common Stocks

 

9,834

 

482,514

 

—

 

492,348

 

Short-Term Investment

 

 

 

 

 

 

 

 

 

Investment Company

 

3,470

 

—

 

—

 

3,470

 

Total Assets

 

$

13,304

 

$

482,514

 

$

—

 

$

495,818

 

 

Transfers between investment levels may occur as the markets fluctuate and/or the availability of data used in an investment’s valuation changes.