Due to restrictions on foreign ownership of A-shares, China is far behind other large markets, both developed and emerging, in terms of foreign ownership of its equities. Even including Chinese stocks listed in Hong Kong or New York, foreign ownership of Chinese stocks was just 11.4% at the end of 2012, half the level seen in Japan and barely more than 20% of foreign ownership of German stocks.
ASHS, the small-cap A-shares ETF, has gained nearly 4% since Sept. 12, the day after DAWM announced creations in the fund would be limited. Since that day, ASHS has taken in nearly half its almost $17 million in assets under management. The ETF debuted in May.
Increased interest in A-shares ETFs appears well-timed and comes as more investors on mainland China are gobbling up local stocks. “The one-month average market participation rate has risen sharply to almost a three-year high for both Shanghai and Shenzhen,” said HSBC in a note posted last week by Barron’s.
Deutsche X-trackers Harvest CSI 300 China A-Shares Fund
