China Index Trackers?

Gadfium

Any index trackers for the Chinese market? Could there be a buying opportunity here?

IronWolf

I think iShares do one, and there is the HK Hang Seng which is a bit easier to get as China are pretty strict on foreign ownership of shares.

I wouldn't personally touch it atm though, China had a massive bubble which is currently collapsing. Over a third of the Shanghai market's shares have been suspended to try and stop the falls, as if that will help. It's still 70% up YTD though and hugely overvalued.

ChopperST

Another lesson for amateur investors not to put all their eggs in one basket. Those who are investing at their risk profile with appropriately diversified portfolios will be able to sleep at night, those who haven't will be fretting.

BBC news ran a story last night about a Chinese single Mum who was a button seller on a local market who put her whole life savings (£20,0000) solely into the Chinese market in June just before the crash started, felt so sorry for her.

Only the Chinese government stepping in and stopping large investors selling and companies ceasing trading is stopping further falls at present.

Chickereeeee

IronWolf wrote: »

I think iShares do one, and there is the HK Hang Seng which is a bit easier to get as China are pretty strict on foreign ownership of shares.

I wouldn't personally touch it atm though, China had a massive bubble which is currently collapsing. Over a third of the Shanghai market's shares have been suspended to try and stop the falls, as if that will help. It's still 70% up YTD though and hugely overvalued.

But the iShares China fund is only up 2% over the last 12 months (and 'only' ever reached 30% up over the last year)

https://www.ishares.com/us/products/239619/ishares-msci-china-etf

bowlhead99

Well the iShares China fund is only tracking MSCI China index which is looking at the internationally-easily-investible universe of China H shares (HKSE listed), B shares, Red chips and P chips. It went up about 15% in USD terms in the first half of this year, 25% over twelve months and had annualised growth of 15% for the last 3 years.

https://www.msci.com/resources/factsheets/index_fact_sheet/msci-china-index.pdf

The real story that people are talking about with the Shanghai index spiking and then crashing leading to mass voluntary suspensions and market interventions is the domestic A shares on Shanghai and Shenzhen exchanges. This was up 34% in USD terms in the first half of this year, over 110% in twelve months, and 27% annualised over last 3 years. And that's after the index had started to fall during June.

https://www.msci.com/resources/factsheets/index_fact_sheet/msci-china-a.pdf

At least it was, until the events of recent weeks.

The indexes have quite different consitituents, with the A index - of what local Chinese people can invest into and outsiders can't buy so easily - covering a lot more companies and being closer to the CSI300 or SSE Composite index. There is a separate running index "Hang Seng China AH Premium Index" which tracks the price disparity of A shares vs H shares for a number of companies listed in both places, and periodically shows that the domestic ones were priced much more expensively; in the pre-credit crunch days the disparity was over 100% with limited scope for arbitrage. I haven't got the latest figures but as of end of May the index showed a premium of 25% for the A shares.

So, when as a foreigner you talk about 'exposure to Chinese shares' or about making a broad investment in Chinese stocks, make sure you know what you really mean by investing in China. The domestically listed A shares that make up the Shanghai index (which has most of the largecaps) or Shenzhen index (generally a bit smaller, or tech oriented) are not part of MSCI Emerging Markets: a long-running plan to include them once they're suitable for inclusion, was deferred again recently. http://www.reuters.com/article/2015/06/10/us-china-stocks-msci-idUSKBN0OP2HG20150610

Chickereeeee

And I understand that, on average, about 50% of the shares of the companies on the exchange are state-owned, non-tradeable and thus cannot really be fairly priced...