Investors are now able to tap into the Chinese growth opportunity through exchange traded funds that directly hold Chinese A-shares trading on mainland stock exchanges.
On the upcoming webcast, Where can investors find opportunities in China?, Anson Chow, V.P. of Passive Asset Management for Asia Pacific at Deutsche Asset & Wealth Management, and Arne Noack, Exchange Traded Product Development at Deutsche Asset & Wealth Management, discuss the long-term investment case for the Chinese market.
For instance, the emerging market has been enacting a number of economic reforms to develop its local economy and shift away from an export-oriented business model and garner a better standing in the eyes of the international market.
Consequently, China’s push toward urbanization and domestic consumption could help sustain future growth as a rising middle class fuels the economy.
Moreover, the Chinese market remains underallocated in many global investment portfolios as investors have only been able to access Chinese equities through Hong Kong-listed shares or companies listed in New York. If Chinese A-shares gains wider acceptance, especially if MSCI includes the securities in its benchmark emerging markets index, the greater demand will also help support the Chinese market. [Not if, but when – A breakdown of MSCI’s decision on China’s onshore equity market]
In the mean time, ETF investors have a number of China A-shares options to track stocks that trade in Shanghai or the Shenzhen indices. For instance, the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), the largest U.S-listed A-shares ETF, targets the 300 largest and most liquid stocks in the China A-shares market.
The Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS), which track more mid-sized Chinese A-shares, includes Chinese A-shares taken from the China Securities 500 Index, stocks listed in Shanghai and Shenzhen.
Additionally, the Deutsche X-trackers Harvest MSCI All China Equity Fund (NYSEArca: CN) allows investors to track mainland Chinese stocks, with a 46.7% position in ASHR and 16.3% in ASHS, and the fund holds Chinese stocks listed in the U.S. and Hong Kong. For instance, CN includes 3.5% in Tencent, 1.9% in Baidu and 1.8% in Alibaba Group.
Financial advisors who are interested in learning more about China’s market can register for the Thursday July 23 webcast here.