The MSCI China Index fell by 20.8% in local currency terms in September. Although the Chinese economy has remained relatively resilient, there has been a dramatic reduction in risk appetite. The top performing sectors were telecommunications and utilities, and the fund was underweight in both. The underweight position in insurance also detracted from performance.Stock selection in consumer staples and technology added value, although it detracted in the energy sector. The fund remains focused on domestic demand stocks (especially in the retail and financial areas) as well as urbanisation/infrastructure related stocks (including the real estate and capital goods sectors).Last month we reduced the weighting in the banking sector, which had seen previous outperformance, and increased the exposure to the capital goods sector, where margins should improve as commodity prices retreat. The fund bought Harbin Power and reduced China Construction Bank.