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Pengana Absolute Return Asia Pacific Fund, December 2015 Monthly Update

Fund Commentary
The Fund finished up 0.7%2 for the month, compared to the HFR Event Driven Index which closed down -0.9%. This brings the Fund’s 2015 performance to 4.6%, compared to the HFR Event Driven Index -6.9% and Asia Pacific Markets -3.4%. The Fund’s average gross and net exposures for the month were 197.4% and 6.6% respectively.
The much anticipated restructuring of the Chinese shipping sector was announced in December, which was rather underwhelming based on the share price performance of the companies involved. As opposed to a full scale merger, the restructuring took the form of asset swaps designed to give each company greater scale in the sub-sector of focus. Based on our expectations, China Shipping Development (1138 HK) came out of this exercise as the biggest beneficiary. This complex restructuring highlights the commitment of Chinese authorities to SOE reform, a critical element of any share market stability going forward. In South Korea, authorities continued to exert pressure on family conglomerates to unwind cross- holdings as Samsung SDI (006400 KS) was told to sell shares in Samsung C&T (028260 KS). This added focus on cross-shareholdings will be a key theme in 2016 that may lead to short term volatility in these holding companies.
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