Exchange traded fund investors can now directly access Chinese A-shares through Deutsche Bank’s latest offering, but traders may have to incorporate other funds to gain total access to China’s market.
The db X-trackers Harvest 300 CSI China A-Shares Fund (NYSEArca: ASHR) has exposure to about two-thirds of the market capitalization of Chinese stocks, reports Eric Balchunas for Bloomberg.
A-shares include Chinese companies incorporated on mainland China that are traded on the Shanghai or Shenzhen exchanges. Foreign investors must qualify as a Renminbi Qualified Foreign Institutional Investor (RQFII) under Chinese regulations to trade A-shares.
Previously, investors could only access Hong Kong or U.S.-listed Chinese companies.
Looking at historic performance, ASHR’s underlying index, the Shanghai Shenzhen CSI 300 Index, has underperformed other U.S.-listed China ETFs. Over the past five years, the CSI 300 Index has gained 67%, whereas the S&P China BMI Index, the underlying index for SPDR S&P China ETF (NYSEArca: GXC), returned 106%. [A China ETF with a More Diversified Approach]
The under-performance in the CSI 300 Index may be attributed to the heavy emphasis on financial stocks and the S&P China BMI Index’s tilt toward outperforming Chinese tech companies.