With the Shanghai-Hong Kong Stock Connect, the program aimed at increasing securities trading between Hong Kong and mainland China, expected to go live next month, exchange traded funds tracking China’s A-shares are attracting increased attention.
More importantly, funds such as the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) and the KraneShares Bosera MSCI China A-Shares ETF (NYSEArca: KBA) are delivering solid returns. Over the past three months, ASHR has climbed 15.2% while KBA, the only A-shares ETF currently using an index from MSCI, jumped 17.5%. [How to Use China ETFs]
“Shanghai-listed stocks have been dismal performers in recent years. But prices have surged lately, and investors have been pumping money into the A-share ETFs. One reason is the hope that easier overseas access to mainland-China stocks will boost their prices over time,” reports Karen Damato for the Wall Street Journal.
Once the Shanghai-Hong Kong Connect launches, foreign investors will be able to account for nearly a quarter of daily trading, a catalyst that buoyed demand for soaring A-shares ETFs. Heavy demand, for ASHR in particular, is forcing the two ETFs to bump up against their respective Renminbi Qualified Foreign Institutional Investor (RQFII), which allows the funds to purchase A-shares equities. [Cash Flows to A-Shares ETFs]
In just the past week, ASHR has added $196.2 million in new assets, bringing its assets under management tally to $516.1 million. That cements ASHR’s status as the dominant A-shares ETF and one of the most successful ETF launches over the past year. It took ASHR just 10 months too eclipse $500 million in AUM.