China, the world’s second largest economy, has quickly become a major factor in the global markets. As investors look for areas of growth, it is becoming harder to ignore this emerging market behemoth.
On the upcoming webcast, Defining Your China Strategy for Today’s Market, Edward Lopez, Head of ETF Product at VanEck, and Natalia Gurushina, Economist, Emerging Markets Fixed Income, VanEck, will dive into the Chinese economy, outline the market outlook ahead and consider targeted strategies to help financial advisors gain exposure to this developing market.
For example, ETF investors can look to the VanEck Vectors ChinaAMC CSI 300 ETF (NYSEArca: PEK) and VanEck Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT) to gain direct access to Chinese mainland markets.
PEK tries to reflect the performance of the CSI 300 Index (CSIH0749), which is comprised of the 300 largest and most liquid stocks in the Chinese A-share market.
While PEK helps investors take on the large-cap segment of the Chinese markets, investors can look to CNXT to capture the smaller companies. CNXT tries to reflect the performance of the SME-ChiNext 100 Index (CNI6109), which tracks the performance of the 100 largest and most liquid China A-share stocks listed and trading on the Small and Medium Enterprise (“SME”) Board and the ChiNext Board of the Shenzhen Stock Exchange.
A-Share of Diversification
Chinese A-shares provides investors another layer of diversification. Investors used to gain exposure to Chinese companies through listed companies on the NYSE or Hong Kong. However, Chinese regulators are now loosening regulation to allow more foreign investors into mainland-listed China stocks.
“Chinese onshore equities have exhibited low correlation against a variety of global equity indices,” according to VanEck.
Through Chinese markets, investors can gain exposure to supply-side reforms and rising incomes that have made consumption growth a driving force of China’s economy. Furthermore, something like CNXT can help investors access non-government owned small- and medium-sized enterprises that have driven the majority of recent technological innovation and economic growth in China.
Financial advisors who are interested in learning more about China can register for the upcoming Thursday, April 4 webcast here.