The A-shares rally has stocks on China’s mainland looking pricey relative to their Hong Kong counterparts. The Hang Seng trades at just over half the P/E of the Shanghai Composite and more than a quarter of A-shares have P/E ratios over 100. However, there are catalysts that could drive A-shares higher.
Van Eck CEO Jan Van Eck noted that there are multiple reforms underway in the financial sector as well: reining in “gray market” loans; removing restrictions on commercial bank lending; developing a more formal, transparent corporate bond market; and reinvigorating the equity markets, including the market for initial public offerings (IPOs), according to a statement.
“By some measures, China is currently the largest economy in the world, so putting in place these kinds of economic and financial reforms takes time,” said van Eck. “However, we believe these reforms are beginning to be priced into the market. The recent rally in Chinese equities suggests to us that other investors are starting to come to a similar conclusion.”
Market Vectors also sponsors the Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT), 2015’s top-performing non-leveraged ETF with a gain of over 53%, and the Market Vectors ChinaAMC China Bond ETF (NYSEArca: CBON).
Market Vectors ChinaAMC A-Share ETF
