“Underexposure has directly led to underperformance,” Goldman added, pointing out that China is the largest market in both the Asia ex-Japan and emerging market indices and made up half of the indices’ year-to-date performance.
The Chinese A-shares market could also see a boost down the line as Beijing petitions major indexers to include mainland shares into global benchmarks. A-shares remains on the watch lists of FTSE and MSCI for possible promotion to emerging markets territory. [A-Shares in an EM ETF Drives Meaningful Performance]
Chinese H-shares have been gaining momentum as efforts to connect the Hong Kong and Shenzhen exchanges help boost China stock returns. [China H-Shares ETFs Still Look Attractive]
Moreover, Chinese banks have been allocating more into their domestic markets, fueling the surge in equities this year. Banking institutions shifted over 8 trillion yuan, or $1.29 trillion, into stocks so far this year ended March, compared to 6.5 trillion yuan in 2014, according to Reorient Research.
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Max Chen contributed to this article.