MSCI’s China A-share index inclusion is a game changer
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    MSCI’s China A-share index inclusion is a game changer

    Russel Chesler, Director, Investments & Portfolio Strategy
    20 June 2017

    MSCI’s announcement today that it will include China A-Shares to its indices will increase demand for them.  VanEck Vectors ChinaAMC CSI 300 ETF  (ASX: CETF) is the only A-share ETF on ASX.  With CETF you can get in ahead of the big end of town which will follow index providers as they continue to increase their allocation to China A-shares

    This morning the world’s largest index provider, MSCI confirmed that it is adding China A-shares into its emerging markets and all country indices.  MSCI announced that China A-shares will make up approximately 0.73% of its emerging markets index, at a 5% partial inclusion factor, increasing over time.  The decision is the result of China’s capital markets being freed up recognising the Chinese government has made significant steps to make A-shares more accessible for international investors. 

    Today’s announcement has the potential to create an opportunity for savvy investors. 

    The way institutional investors construct their portfolios is to hold positions similar to recognised indices, such as MSCI’s, otherwise they are taking a big risk. If markets go against them and they drastically underperform the index, they will be seen as incompetent. Better to be just above or just below the index.

    Putting two and two together, the previous difficulty in getting hold of China A-shares and their exclusion from indices despite the market's size, means A-shares are under-represented in worldwide indices and institutional portfolios.  Indices will increase their weightings to China A-shares to be more representative of the Chinese market’s size and institutional investors will follow.

    CETF gives investors a unique opportunity to get into China A-shares ahead of this institutional wave – a chance to get in before the new institutional demand drives up the prices.

    VanEck has the only China A-shares ETF available on ASX through ASX code ‘CETF’.

    With CETF you can get in ahead of the big end of town which will follow from May 2018 when MSCI include China A-shares in its world indices.

    CETF provides pure China A-share exposure, giving investors the opportunity to access the 300 largest and most liquid A-shares without any repatriation restrictions.

    For more information on CETF click here.

       

    IMPORTANT NOTICE: Issued by VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’). VanEck is a wholly owned subsidiary of Van Eck Associates Corporation based in New York, United States. VanEck Vectors ETF Trust ARBN 604 339 808 (the ‘Trust’) is the issuer of shares in the VanEck Vectors ChinaAMC CSI 300 ETF (‘US Fund’). The Trust and the US Fund are regulated by US laws which differ from Australian laws. Trading in the US Fund’s shares on ASX will be settled by CHESS Depositary Interests (‘CDIs’) which are also issued by the Trust. The Trust is organised in the State of Delaware, US. Liability of investors is limited. VanEck Associates serves as the investment adviser to the US Fund. VanEck, on behalf of the Trust, is the authorised intermediary for the offering of CDIs over the US Fund’s shares and issuer in respect of the CDIs and corresponding Fund’s shares traded on ASX.

    This is general information only and not financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Investing in international markets has specific risks that are in addition to the typical risks associated with investing in the Australian market. These include currency/foreign exchange fluctuations, ASX trading time differences and changes in foreign laws and tax regulations.  Before making an investment decision in relation to the US Fund you should read the PDS and with the assistance of a financial adviser consider if it is appropriate for your circumstances. The PDS is available at www.vaneck.com.au or by calling 1300 68 38 37.

    Past performance is not a reliable indicator of future performance. No member of the VanEck group of companies or the Trust gives any guarantee or assurance as to the repayment of capital, the payment of income, the performance or any particular rate of return from the US Fund.

    CETF is subject to elevated risks associated with investments in Chinese securities, including A-shares, which include, among others, political and economic instability, inflation, confiscatory taxation, nationalisation, and expropriation, market volatility, less reliable financial information, differences in accounting, auditing, and financial standards  and requirements,  and uncertainty  of implementation  of Chinese law. In addition, CETF is also subject to liquidity and valuation risks, currency risk, non-diversification risk and other risks associated with foreign and emerging markets investments. See the PDS for more information on risks.

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