Advertisement
U.S. markets open in 5 hours 6 minutes
  • S&P Futures

    5,206.75
    -8.00 (-0.15%)
     
  • Dow Futures

    39,218.00
    -5.00 (-0.01%)
     
  • Nasdaq Futures

    18,170.75
    -60.75 (-0.33%)
     
  • Russell 2000 Futures

    2,047.90
    -1.90 (-0.09%)
     
  • Crude Oil

    82.53
    -0.19 (-0.23%)
     
  • Gold

    2,155.40
    -8.90 (-0.41%)
     
  • Silver

    25.08
    -0.18 (-0.73%)
     
  • EUR/USD

    1.0851
    -0.0026 (-0.24%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.54
    +0.21 (+1.47%)
     
  • GBP/USD

    1.2691
    -0.0038 (-0.30%)
     
  • USD/JPY

    150.3360
    +1.2380 (+0.83%)
     
  • Bitcoin USD

    63,819.28
    -3,983.50 (-5.88%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,727.04
    +4.49 (+0.06%)
     
  • Nikkei 225

    40,003.60
    +263.20 (+0.66%)
     

A-Shares ETFs Could be China Value Plays

Investors who are looking into Chinese equities may find better value in China A-shares and related exchange traded funds.

The CSI 300 Index, which tracks stocks listed on the Shanghai and Shenzhen exchanges, trades at a price-to-earnings ratio of less than 10, the lowest in over a decade, while Chinese shares listed on the Hong Kong exchange trades at a multiple of 12.8, reports Rupert H for ValueWalk.

Looking at China’s Hang Seng China AH Premium Index, which measures the premium, or discount, of A-shares to H-shares, the index sits at around 91.15, or 1.2% below the last two days close. The benchmark uses a simple 0 to 100 scale measurement, with readings equal to or greater than 100 reflecting A-shares are trading on paror at a premium to H-shares on average.

However, given the current reading, the index indicates that Chinese A-shares are trading at a 9.7% discount to H-shares. Additionally, the index is at a five-year low, indicating that A-shares are trading at their largest discount to H-shares in five-years. In comparison, the index has averaged 110 over the past five-years.

With recent new additions to the ETF market, investors can now track the Chinese A-shares market. The db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) and Market Vectors ChinaAMC A-Share ETF (PEK) both track the CSI 300 Index. The KraneShares Bosera MSCI China A ETF (KBA) tracks the MSCI China A Index. The PowerShares China A-Share Portfolio (CHNA) is an actively managed option that utilizes SGX FTSE China A50 Index futures contracts. [A Chinese Buffet With This New ETF]

Through the QFII system, foreign investors are able to access Chinese A-shares, which trade on the Shanghai Stock Exchange and the Shenzen Stock Exchange and are typically only available to mainland citizens. A-shares are also only quoted in the Chinese renminbi currency.

Unlike other China ETFs, these A-Shares ETFs track companies listed in China’s stock exchange, whereas the other options track companies listed on Hong Kong or U.S. exchanges.

For example, the iShares China Large-Cap ETF (FXI) tracks 25 of the largest Chinese stocks that trade on the Hong Kong exchange. The SPDR S&P China ETF (GXC) follows 500 stocks that are listed on the New York and Hong Kong exchanges.

For more information on China, visit our China category.

Advertisement