ETFs to Prosper from China's New Growth Markets

LOW COST FUNDS: As China embraces a new investment led economic plan, the European ETF market needs to provide more tailored products to capture the growth industries

Monika Dutt 23 November, 2015 | 2:57PM

This article is part of Morningstar’s Guide to Investing in Asia where we navigate the potential risks, for the chance of fantastic rewards from across the continent.

In China, the economy is transitioning from an export-led growth model to a consumption-driven one. According to China’s Premier Li urbanisation will narrow the income gap between rural and urban residents, and urban household-income will increase at least twofold by 2022. All of these changes create investment opportunities; savvy investors may well be eyeing funds targeting China’s fastest-growing sectors including retail, e-commerce, internet and mobile, while limiting their exposure to heavy industries.

The problem is the European ETF offering exposed to China’s growing businesses is paltry. A host of products track flagship market capitalisation indices, but most of these are heavily exposed to financials. The Hang Seng China Enterprise Index (HSCEI) allocates 70% of its total value to the financial sector, while the FTSE China 50 and MSCI China assign a 52% and 41% weighting to it, respectively.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Monika Dutt  is a Passive Strategies Research Analyst for Morningstar Europe

Audience Confirmation

By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies