Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 5 CHAIRMAN’S STATEMENT (CONTINUED) In 2021, following a decision to recall the loan to Rong Bao Zhai Culture Co., Ltd., the Group received the full amount of the loan principal plus interest accrued of US$50.09 million, officially exiting from the investment, primarily because the project’s future prospects were less than expected. In addition, the Group sold a total of 0.823 million shares of Cambricon Technologies Corporation Limited for net proceeds of US$12.66 million in order to realise a return on this investment and to increase working capital. After the sale of those shares, the Group no longer holds any interest in the company and has fully exited from the project. The existing investment management agreement expired on 31 December 2021. As such, the Company and the Investment Manager renewed an investment management agreement with a term of three years on 18 October 2021. With the consideration and recommendations of the Independent Board Committee, comprised entirely Independent Non-executive Directors of the Company, and approved by the independent shareholders of the Company on 29 November 2021, the new agreement came into effect on 1 January 2022. Looking ahead to 2022, there will be challenges as well as opportunities. The uncertainty of economic growth may persist due to external factors such as the pandemic, global geopolitics, economic and financial instability, and rapid technological change. In 2022, it is expected that the global economy will face uncertainty regarding the withdrawal of macroeconomic stimulus policies in major developed economies. The quantitative easing policies that have lasted for more than three years have placed increasing pressure on sovereign debt and inflation. Monetary policies in major developed economies may therefore gradually change towards normalisation, which could include a cycle of rising interest rates in 2022, while emerging market economies could face strong pressures from capital outflows and currency devaluations. Despite the triple pressures of declining demand, supply shocks and weakening growth expectations, the fundamentals of China’s economy remain unchanged, and are expected to be stable and sound in the long run. The basic characteristics of China’s economy, which remains full of potential, resilience, vitality, and adaptability, along with ample policy tools, should continue to support long-term growth and development. Although we expect that various asset price risks, arising from slowing growth in the global economy (including China) in medium- to long-term, along with greater volatility in the capital markets, will pose certain challenges to our investment portfolio, the Investment Manager, as always, will face the challenges ahead and strive to identify new investment opportunities, as well as to seek to optimise our mix of investments in a way that will increase shareholders’ return. Lastly, on behalf of the Board, I would like to offer my heartfelt gratitude to Mr. ZHANG Jian for his valuable contributions to the Company during his tenure as the Director and Chairman of the Board, as well as to the members of the Audit Committee, Nomination Committee and Investment Committee, and to the entire staff of the Investment Manager, for their many contributions and dedicated effort, and to the shareholders for their support. As always, I, with the Board, will continue to give our best effort in leading the Group as we seek to create value for shareholders in the coming year. Mr. ZHOU Xing Chairman Hong Kong, 28 March 2022