Wednesday, May 30, 2018 12:55 PM EDT
We all know that China has risen to the 2nd largest economy in the world; however how many China A-Share stocks do you own? The answer may surprise you. The answer is likely none. Even if you own an international ETF or mutual fund, the fact is that the main benchmark index MSCI doesn't include any China A-Share stocks from the Shanghai or Shenzhen exchanges, the 4th and 8th largest in the world.
This is set to change as last year MSCI announced that China A-Shares will finally be included beginning in June 2018 at less than 1% of the MSCI emerging market index and many experts believe that within 5 years, they will move to full inclusion. This means that institutional investors will be forced to look seriously at A-Shares and fund flows should be a tailwind for the next several years.
Unbalanced weightings
Despite being the 2nd largest economy in the world, Chinese stocks account for just 3.67 percent of the MSCI All Country World Index. The only Chinese stocks included currently are Hong Kong and US-listed companies. China has only half the weight of Japan despite the fact that its economy is twice as large. We expect this large gap to close in short order but China will still be much smaller in comparison to the US weighting.
Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no ...
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Disclosure: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede Capital Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Runnymede Capital Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
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