China’s regulators are working on a plan to bring prominent Chinese technology stocks that trade on foreign exchanges back home, potentially fueling a surge in these foreign-listed tech names and opening an opportunity for related exchange traded funds ahead.
China’s most successful internet companies, like Tencent, Alibaba and Baidu, among others, are listed abroad on foreign exchanges like the New York Stock Exchange or Hong Kong Stock Exchange. These companies first chose to list on foreign exchanges in an attempt to gain more widespread recognition back when Beijing was limiting foreign exposure to Chinese A-shares.
However, a new plan could smooth these Chinese internet stocks’ entry back home and potentially fuel speculative support in their shares. China’s regulators are working on a way to allow the country’s largest tech names to list on mainland exchanges via a structure called Chinese Depository Receipts, or CDRs, which allow investors to own company shares indirectly, reports Jacky Wang for the Wall Street Journal.
The action could potential open the doors to allow China’s robust population easier access to these internet giants that have been trading in foreign markets.
Investors who are interested in gaining exposure to the explosive growth in China’s technology segment have a number of ETF options to choose form. For instance, the KraneShares CSI China Internet Fund (NasdaqGM: KWEB) and KraneShares Emerging Markets Consumer Technology ETF (NYSEArca: KEMQ) include exposure to some of China’s largest internet and e-commerce names.
Additionally, ETF investors can also take on a broad China focus with a larger technology tilt through country-specific ETFs like the iShares MSCI China ETF (NASDAQ: MCHI) and PowerShares Golden Dragon China Portfolio (NasdaqGM: PGJ), which come with a 41.6% and 45.4% tilt to technology companies, respectively.
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