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<p><strong>Your capital is at risk. Past performance is not a guide to future returns. The following update is based on a representative portfolio. As such, stock examples may not be held in every client portfolio, and performance may differ.</strong></p>
<p data-start="32" data-end="415"><strong>Ben Buckler: </strong>This quarter in China, lobsters have been getting a lot of attention. I know, that’s not the usual place to begin a quarterly strategy update. But “Lobster” is the Chinese nickname for Openclaw, a highly autonomous, open-source AI agent, which has gone viral in recent months, and tells us something important about China today. China’s not just trying to participate in the AI race.</p>
<p data-start="417" data-end="783">It’s trying to deploy AI at scale, almost like a new layer of national infrastructure, and commercialise it faster than many other countries in the hope of making the economy more productive. That, for us, was one of the most important messages from the Two Sessions meetings this quarter, where Beijing sets its annual economic targets and broader policy direction.</p>
<p data-start="785" data-end="1267">The clearest message was Beijing’s continued emphasis on resilience and technological self-reliance. That means building a more modern industrial system, reinforcing the real economy and trying to channel capital and policy support into those strategic industries. The more positive political signalling toward private enterprise also matters in that context. It suggests that supporting entrepreneurial confidence is once again becoming a more important part of the policy toolkit.</p>
<p data-start="1269" data-end="1832">We see these as positive developments for a portfolio that seeks to invest in China’s leading innovative growth companies. Now, markets did not move in a straight line. Chinese equities started 2026 more firmly, but a more uncertain external backdrop, especially the conflict in the Middle East, weighed on sentiment in March and left the index down over the quarter. While China has not been central to that conflict, it’s a major trading nation, so prolonged instability can affect sentiment, commodity prices and the external environment for Chinese companies.</p>
<p data-start="1834" data-end="2261">Against this background, it’s perhaps not surprising the energy sector was strong. On top of that, AI remains one of the most interesting areas from an investment perspective. But if AI is becoming core infrastructure, the opportunity is far broader than just consumer applications or chatbots. It extends into the enabling layers beneath them, including power, grids, storage, networking and industrial components behind them.</p>
<p data-start="2263" data-end="2871">That’s why some of the most compelling opportunities in China today sit at that intersection of software, automation, energy systems and advanced manufacturing. We can see this in the top contributors to performance. The world’s leading EV battery and energy storage company, CATL, delivered excellent results and highlighted a strategic pivot to expand across the entire energy and transportation landscape. MiniMax benefited from strong earnings and rapidly rising demand for its AI models, which reinforced the market’s view that it’s one of the clearest beneficiaries of accelerating AI inference demand.</p>
<p data-start="2873" data-end="3208">Weichai Power also performed strongly, helped by growing interest in its role as a provider of power solutions linked to the data centre buildout. We took a little bit of money out of both MiniMax, which went up five-fold in the quarter, and Weichai, to reflect rising valuations and to invest in areas that are less in that limelight.</p>
<p data-start="3210" data-end="3566">On the weaker side, Air China suffered from higher oil prices, and we exited Trip.com as regulatory concerns increased. More broadly, we used the quarter to rotate away from some more correlated growth exposures and into a broader mix of cyclical, financial and idiosyncratic opportunities, including selected additions in financials, materials and energy.</p>
<p data-start="3568" data-end="4006">So where does that leave us? Our outlook remains constructive but measured. There’s still a significant amount of uncertainty in global markets, driven by a more multipolar world, the pace of AI development and ongoing geopolitical tensions. In China, the domestic recovery is still likely to be steady rather than dramatic, and property weakness, soft consumer confidence and the external environment remain important watchpoints for us.</p>
<p data-start="4008" data-end="4420">But even so, Chinese equities continue to offer a differentiated opportunity set. Valuations remain reasonable relative to global peers, and we see attractive opportunities in businesses exposed to AI diffusion, industrial upgrading, energy transition and the rise of stronger domestic brands. What stands out today is that innovation in China is moving beyond headline excitement and into real-world deployment.</p>
<p data-start="4422" data-end="4828">That was already a key theme in 2025, and the early months of 2026 suggest it is continuing. So whether people are talking about Lobsters, Wukong — the MonkeyKing, which is Alibaba’s equivalent — or the next high-profile AI product, we think the more important opportunity may lie beneath the surface: in the industrial, digital and energy infrastructure being built to support that new wave of innovation.</p>
<p data-start="4830" data-end="4914">And that remains one of the most compelling long-term opportunities we see in China.</p>
<p data-start="4830" data-end="4914"> </p>
<h3 class="TABLEHEADER1212pt">China</h3>
<p><strong>Annual past performance to 31 March each year (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 74px;">
<tbody>
<tr style="height: 18.5px;">
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"><strong>2022</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"><strong>2023</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"><strong>2024</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"><strong>2025</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 18.5px;"><strong>2026</strong></td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">China Composite (Gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-31.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-9.4</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-24.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">34.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">13.0</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">China Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-32.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-10.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-24.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">33.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">12.1</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">MSCI China All Shares</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-24.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-6.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">-16.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">28.8</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px;">10.6</td>
</tr>
</tbody>
</table>
<p> </p>
<p><strong>Annualised returns to 31 March 2026 (%)</strong></p>
<table border="1" style="border-collapse: collapse; width: 100%; border-width: 0px; height: 92.5px;">
<tbody>
<tr style="height: 37px;">
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 61.3387%;"> </td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 13.1043%;"><strong>1 year</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 12.713%;"><strong>5 years</strong></td>
<td style="border-width: 1px 1px 2px; border-style: solid; border-color: rgb(204, 204, 204) rgb(204, 204, 204) rgb(0, 0, 0); border-image: initial; padding: 10px; height: 37px; width: 12.844%;"><strong>10 years</strong></td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 61.3387%;">China Composite (gross)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.1043%;">13.0</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.713%;">-6.5</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.844%;">7.9</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 61.3387%;">China Composite (net)</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.1043%;">12.1</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.713%;">-7.2</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.844%;">7.0</td>
</tr>
<tr style="height: 18.5px;">
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 61.3387%;">MSCI China All Shares</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 13.1043%;">10.6</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.713%;">-3.3</td>
<td style="border: 1px solid rgb(204, 204, 204); padding: 10px; height: 18.5px; width: 12.844%;">5.9</td>
</tr>
</tbody>
</table>
<p><span class="source-text"><strong><br>Source:</strong> Revolution, MSCI. US dollars. Net returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised.<br><br></span></p>
<p><strong>Past performance is not a guide to future returns.</strong></p>
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