Issuers Want in on China A-Shares ETF Party

ASHR has gained more new assets than any other China ETF since debuting a year ago, according to Bloomberg. ASHR added $31.7 million since the start of this month while ASHS has seen inflows of more than $10 million since the start of the fourth quarter. The small-cap ETFs has nearly quadrupled in size in recent weeks.

One reason A-shares equities have risen in popularity among global institutional investors is reduced correlations to developed and emerging markets stocks.

“An interesting data point to highlight is the lack of correlation the China A market has to other Chinese markets. 11% of the names in MSCI China A are dually listed on the Hong Kong Stock Exchange (Chinese stocks listed on the Hong Kong exchange are commonly referred to as H-Shares). In looking at periods of market stress we find the disconnect between the H-Share and A-Share market noteworthy,” according to KraneShares.

From Sept. 30, 2003 through Sept. 30, 2014, the MSCI China A Index, KBA’s underlying benchmark, had a correlation of just 0.28 to the MSCI Emerging Markets Index and just 0.17 to the MSCI EAFE Index, according to KraneShares data.

China A-Shares Correlations

Chart Courtesy: KraneShares