China’s true growth potential

How to access China’s true growth potential

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Why invest in China now?

China is on track to surpass the US as the world’s largest economy in 2028. It already boasts the second-largest equity and bond markets globally, with an array of both well-established industry leaders and up-and-coming innovators.

China Position 2021

Sponsored by Invesco and written by Economist Impact, this report is a follow up to the 2019 China Position study. Despite headlines of tech and trade tensions or decoupling pressures, asset owners remain considerably invested in China. We explore why.
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China Position 2021

Navigating China

With the opportunity set as expansive as the country itself, it’s crucial for international investors to gain the most effective exposure. Discover how ETFs can open the door to China, helping you gain access to the country’s wide range of growth stories

Investing in China’s equity market FAQ

It is split into many different share types, which can be grouped into onshore-listed (mainland China) and offshore listed (Hong Kong and US) shares. 

The domestic onshore market is largely dominated by A-shares and more aligned with China’s domestic growth. With a broad range of sectors that include both old economy (e.g. chemicals, industrials) and new economy (e.g. technology, consumers) companies, the A-share market represents China's rapidly changing domestic market. 

 

Interest and flows into the A-share market has increased in recent years, thanks to the “Stock Connect” programme that allows global investors to trade A-shares through the Hong Kong Stock Exchange. Foreign ownership and research coverage in A-shares remain low, which could present alpha opportunities for investors.

The other part of the China market is offshore equities, which are listed on Hong Kong and US stock exchanges. Since access to A-shares were historically limited until recent years, foreign investors could only access Chinese companies through offshore equities. Offshore shares are mostly comprised of well-known global tech leaders with greater international presence, such as Alibaba and Tencent.

Stock Connect is the trading link between the onshore markets (Shanghai and Shenzhen Stock Exchanges) and the Hong Kong Stock Exchange. It allows international investors to trade mainland-listed shares (A-shares) via the Hong Kong Stock Exchange, which makes it the more accessible channel for A-shares. Introduced in 2014, the Stock Connect program has increased investment flows and improved accessibility to China’s onshore market for international investors.

 
Our index excludes A-shares that cannot be traded via Stock Connect, which significantly improves the tradability of the index.

China A-shares are shares of companies incorporated in mainland China and traded on the Shanghai and Shenzhen stock exchanges (onshore) in Renminbi.

A-shares are more aligned with China’s domestic growth, with a greater focus on technology and consumer-oriented companies that are generally not available in offshore markets. A-shares also exhibit low correlation to other equity markets, which could offer diversification benefits. 

An "all shares" approach combines both onshore and offshore equities, and offers the broadest opportunity set and diversification for investing in China.

Download our guide to discover more about China’s different share types.

China market snapshot

  • Data as at 28 February 2022, unless otherwise stated. Costs may increase or decrease as result of currency and exchange rate fluctuations. Consult the legal documents for further information on costs.  

     

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    This document is marketing material and is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. This document should not be considered financial advice. Persons interested in acquiring the product should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences. Any calculations and charts set out herein are indicative only, make certain assumptions and no guarantee is given that future performance or results will reflect the information herein. For details on fees and other charges, please consult the prospectus, the KIID and the supplement of each product. 

     

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. 

     

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