Along with ETFs, such as FXI and HAO, that track stocks trading in Hong Kong, investors have embraced funds that offer exposure to China’s previously hard-to-access A-shares, or the stocks that trade in the mainland markets of Shanghai and Shenzhen.
The Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) is just 10 months and is already a $408.8 million ETF. A-shares ETFs have proliferated with addition of funds such as the KraneShares Bosera MSCI China A-Shares ETF (NYSEArca: KBA). From a valuation perspective, the time is now to give A-shares ETFs consideration. [A-Shares ETFs Standout]
KraneShares Managing Director Brenan Ahern told Barron’s mainland Chinese stocks trade at a 10% discount to their Hong Kong-listed counterparts.
Keeping with the theme of tactical application of China ETFs, with the Alibaba initial public offering imminent, the high-flying KraneShares CSI China Internet Fund (NasdaqGM: KWEB) and its stablemate, the KraneShares CSI China Five Year Plan ETF (NYSEArca: KFYP), will be two of the first ETFs to add Alibaba.
The underlying indices for both ETFs allow for the addition of Alibaba after the stock’s eleventh trading day and with a valuation of around $160 billion at the mid-point of the $60 to $66 offering range, it is reasonable to expect Alibaba will quickly become a significant holding in KWEB and KFYP. [What Alibaba’s Valuation Means for ETFs]
Guggenheim China Small Cap Index ETF