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ETFs to Access China’s Growing A-Shares Market


Investors are now able to tap into the Chinese growth opportunity through exchange traded funds that directly hold Chinese A-shares trading on mainland stock exchanges.

On the upcoming webcast, Where can investors find opportunities in China?, Anson Chow, V.P. of Passive Asset Management for Asia Pacific at Deutsche Asset & Wealth Management, and Arne Noack, Exchange Traded Product Development at Deutsche Asset & Wealth Management, discuss the long-term investment case for the Chinese market.

For instance, the emerging market has been enacting a number of economic reforms to develop its local economy and shift away from an export-oriented business model and garner a better standing in the eyes of the international market.

Consequently, China’s push toward urbanization and domestic consumption could help sustain future growth as a rising middle class fuels the economy.

Moreover, the Chinese market remains underallocated in many global investment portfolios as investors have only been able to access Chinese equities through Hong Kong-listed shares or companies listed in New York. If Chinese A-shares gains wider acceptance, especially if MSCI includes the securities in its benchmark emerging markets index, the greater demand will also help support the Chinese market. [Not if, but when – A breakdown of MSCI’s decision on China’s onshore equity market]

In the mean time, ETF investors have a number of China A-shares options to track stocks that trade in Shanghai or the Shenzhen indices. For instance, the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) , the largest U.S-listed A-shares ETF, targets the 300 largest and most liquid stocks in the China A-shares market.

The Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (ASHS) , which track more mid-sized Chinese A-shares, includes Chinese A-shares taken from the China Securities 500 Index, stocks listed in Shanghai and Shenzhen.

Additionally, the Deutsche X-trackers Harvest MSCI All China Equity Fund (CN) allows investors to track mainland Chinese stocks, with a 46.7% position in ASHR and 16.3% in ASHS, and the fund holds Chinese stocks listed in the U.S. and Hong Kong. For instance, CN includes 3.5% in Tencent, 1.9% in Baidu and 1.8% in Alibaba Group.

Financial advisors who are interested in learning more about China’s market can register for the Thursday July 23 webcast here.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.