Company: CAF
Filing Date: 2025-03-06
Form Type: N-CSR
Source: 0001104659-25-021323
Chunk: 1

Company: Morgan Stanley China A Share Fund, Inc.
Filing Date: 2025-03-06
Form: N-CSR
Chunk 1
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Performance

For the year ended December 31, 2024, the Morgan Stanley China A Share Fund, Inc. (the "Fund") had total returns of 8.21%, based on net asset value, and 0.36% based on market value per share (including reinvestment of distributions), compared to its benchmarks, the MSCI China A Onshore Index (the "Index"), which returned 11.59% and, the "China Blended Index", a custom blend of 80% of the MSCI China A Onshore Index and 20% of the MSCI China Index, which returned 13.19%. On December 31, 2024, the closing price of the Fund's shares on the New York Stock Exchange was $12.46, representing a 20.54% discount to the Fund's net asset value per share. Past performance is no guarantee of future results.

Factors Affecting Performance

• Despite a volatile year with renewed U.S.-China tensions, China saw a meaningful recovery driven by the government's earlier-than-expected policy pivot that was announced on September 24, 2024.

• The Fund posted positive returns for the year, helped by the recovery in the broader Chinese market. On a relative basis, the Fund underperformed the Index for the year (based on net asset value performance). The Fund's sector allocation and stock selection detracted from relative returns.

• At the sector level, our overweight allocation and stock selection in the financials, consumer discretionary and utilities sectors contributed to relative returns. Our underweight allocation to cyclical sectors such as the materials sector also contributed to relative returns.

• The relative gains, however, were offset by detractions from our stock selection in the industrials, health care and consumer staples sectors. Our overweight allocations to the health care and consumer staples sectors also detracted from relative performance. Our underweight allocation and stock selection in the information technology (IT) sector also disappointed as the Fund had less exposure than the Index to many domestic IT and technology companies in China whose share prices rallied on artificial intelligence hype, which dragged relative performance.

• At the stock level, the top contributors to the Fund's relative performance over the year were its overweight holdings in two major national commercial banks and an air conditioner manufacturer. Chinese home appliances stocks rallied after the government announced measures in July 2024 to support consumer trade-in and upgrade subsidy programs.

• The largest detractors from relative performance were the Fund's overweight holdings in a medical equipment manufacturer