China has been more receptive to foreign investment as of late as it looks to become less reliant on outside companies to shore up its economy. Given that, a rise in foreign investment is giving the second-largest economy a boost to its stock market.

“The rally in Chinese equities is getting a turbo boost from foreign investors in a sign that fear of financial decoupling between the U.S. and China has not reached stock markets,” a Nikkei Asian Review article noted. “The CSI-300 Index of the largest listed shares on the Shanghai and Shenzhen stock exchanges has climbed 15.7% this year, only lagging the Nasdaq composite index among major global indexes. And the country’s stock market capitalization is hovering at close to $10 trillion — levels not seen since the 2015 crash that wiped out nearly half of its value.”

ETF investors looking to get Chinese equity exposure can consider the Xtrackers MSCI All China Equity ETF (CN). CN seeks investment results that correspond to the performance, before fees and expenses, of the MSCI China All Shares Index, which is designed to capture large- and mid-capitalization representation across all China securities listed in Hong Kong, Shanghai, and Shenzhen.

“A major portion of the rise [in Chinese stocks]was contributed by foreign funds,” said Paul Sandhu, head of multi-asset quant solutions Asia-Pacific at BNP Paribas Asset Management in Hong Kong. “This will continue into 2021.”

CN Chart

CN data by YCharts

Here are two more options to consider as China continues its recovery from the Covid-19 pandemic:

  1. Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 300 Index. The fund will normally invest at least 80% of its total assets in securities of issuers that comprise the underlying index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market. The underlying index includes small-cap, mid-cap, and large-cap stocks.
  2. Xtrackers MSCI China A Inclusion Equity ETF (NYSEArca: ASHX): The investment seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI China A Inclusion Index. The fund will normally invest at least 80% of its total assets in securities (including depositary receipts in respect of such securities) of issuers that comprise the underlying index. The underlying index is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.

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