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Investors Still Have a Taste for Chinese Shares Amid Trade War

This article was originally published on ETFTrends.com.

U.S. President Donald Trump and Chinese President Xi Jinping agreed to withhold further tariffs after meeting at the G-20 summit in Japan, but the trade war is far from over. Still, this hasn't put a bad taste in the mouths of investors who are still snatching up shares of Chinese equities, according to UBS Securities.

In particular, investors have had a penchant for A-Shares the last 12 to 18 months, which represent China's biggest and best equities. Furthermore, they represent pure-play opportunities as China continues to expand access to its markets.

Eugene Qian, president of UBS Securities, said that an estimated $70 billion “should come into A shares by the end of the year." Of course, a tangible trade deal could even mean more interest in Chinese shares.

“Given the fact that the two presidents met and agreed to restart negotiations perhaps where they left in May — I think that itself is a positive,” said Qian.

“The China-U.S. trade tensions may have some time to go. In other words, it won’t be resolved overnight, certainly not in the next 30 days. But markets react, at this particular juncture, to say this is better than not to have this kind of agreement,” he added.

Here are three A-Shares ETFs investors can add to their portfolios:

  1. Xtrackers CSI 300 China A-Shares ETF (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 CSI 500 China A-Shares Small Cap ETF (ASHS) : seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 500 Index. The index is designed to reflect the price fluctuation and performance of small-cap companies in the China A-Share market and is composed of the 500 smallest and most liquid stocks in the China A-Share market. Under normal circumstances, the fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in A-Shares of Chinese small-cap issuers or in derivative instruments and other securities that provide investment exposure to A-Shares of Chinese small-cap issuers.
  3. Xtrackers MSCI China A Inclusion Equity ETF (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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