[Stock tip: China] Riding the Ascending Dragon

5 Chinese ETFs the newspaper never told you about.

 

Goh Eng Yeow’s 9 July 2017 article in The Sunday Times (Stock Market: Ascent of the Dragon) discusses the necessity of plunging into China’s volatile bourse, as the country’s burgeoning market provides a prime window for investment.

 

Goh recommends buying into the index fund tracking the FTSE China A50 Index, which tracks the top 50 A-shares listed on the Shanghai and Shenzen bourses.

 

But there are five more index funds for the China market listed on the Singapore Exchange that investors can consider. The choice of which fund to buy should be dictated mainly by the investor’s preference for exposure in the different sectors.

 

But before riding the dragon, investors should note the level of liquidity for each ETF (the Lyxor ETF appears to be the least liquid of the lot).  Annual fees also deserve special consideration, especially if this is meant to be a long-term holding. Besides the annual management fee, there are typically other fees of around 0.2%.

 

The five other Chinese indices are:

 

DBXT CSI300 (US$) has 300 A Shares listed on the Shanghai (70%) and Shenzen (30%) exchanges, and is mainly focused on the Finance (40%) and Infotech (8%) sectors.

  • Annual management fee: 0.3%

  • Asset under management: S$414 million (as of end May 2017).

 

DBXT MSChina (US$) has 150 stocks (non A-China stocks based on the MSCI China Index) and is also concentrated in the Finance (24%) and Infotech (37%) sectors.

  • Annual management fee: 0.45%

  • Asset under management: S$244 million (as of end June 2017).

 

DBXT China50 (US$) is based on the top 50 mainland Chinese companies listed on the Hong Kong Stock Exchange. This is an ETF heavily weighted by Finance (57%), Telecommunications (11%), Oil & Gas (10%) and Technology (9%) stocks.

  • Annual management fee: 0.4%

  • Asset under management: S$233 million (as of end June 2017).

 

Lyxor ChinaH (US$) is based on the Hang Seng China Enterprises Index, which comprises H-shares listed on the Hong Kong Stock Exchange and included in the Hang Seng Mainland Composite Index.  Its main constituents are Finance (72) and Energy (12%) stocks.

  • Annual management fee: 0.45%

  • Asset under management: US$587 million (as of end May 2017).

 

UETF SSE50China (S$) is based on the Shanghai Stock Exchange 50 Index. The fund’s constituents are mostly in FinancE (67%) and Industrial (13%) sectors. 

  • Annual management fee: 0.45%

  • Asset under management: S$32 million (as of end June 2017).

     

     

Are you planning to enter the Chinese stock market? Which ETF would you purchase? Tell us in the comments.

 

 

About the Author

Th’ng Beng Hooi, CFA, lectures on Ethics for AB Maximus & Co. He was previously VP for Dealing and Resource Development at a listed regional stock-broking firm and is the lead co-author of various financial regulatory examination study guides in Singapore and Malaysia.

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