Looking beyond the short-term volatility surrounding the trade talks, investors may find a long-term opportunity in Chinese markets.

“We see three drivers of the turnaround in China A-shares after a tough 2018. First, international flows into A-shares have accelerated amid improving sentiment toward China–and EMs more broadly,” according to BlackRock.

Catalysts remain that could send A-shares and ETFs such as CNYA higher as 2019 moves along.

“We see these drivers persisting in the near term and remain positive on the A-share equity market. Global investor positioning in China is still light. Official data suggest international investors hold only 3% of A-shares, and we could see this figure increasing,” according to BlackRock. “An upcoming change by index provider MSCI could quadruple the weighting of A-shares in its EM equity index to nearly 3% from 0.7%. Finally, valuations are still attractive, though a large unwind of negative sentiment means the value isn’t as big as it was in late 2018.”

For more information on the Chinese markets, visit our China category.

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