Globalization of China A-shares
Globalization of China A-shares
Biggest investment trend of this decade (PDF attachment)
Executive Summary
The China A-share market is big and expanding, with a total market cap of USD 14 trillion (No. 2 globally) and a record number of 524 IPOs in 2021
The market is rapidly opening to global investors, with a record inflow of USD 68 billion in 2021
A-shares would account for 22% of emerging market equity, when fully included in the index
By then all China would account for nearly half of emerging market equity
We expect over USD 640 billion of foreign capital inflows as a result of the full index inclusion
China is still under-represented in global indices, compared to its weight in the global economy
A-share trading is dominated by retail investors, presenting both challenges and opportunities
The low correlations of A-shares with other markets can be used to lower the total portfolio risk
Be careful with the “growth trap” and the timing risk of passive investing in A-shares.
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