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Gateway to China: Trading Chinese Government Bonds

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China is becoming less resistant to safeguarding its businesses, which will open the pathways to more foreign investment. China ETFs have also been the beneficiaries of index provider MSCI Inc. announcing recently that it would quadruple its weighting of large-cap Chinese shares in its benchmark indexes.

A recent MSCI Inc. press release said the index provider would increase the weight of China A shares by upping the inclusion factor from 5 percent to 20 percent.

“There are a lot of companies on mainland China that just recently, because Chinese laws have loosened up, that have allowed investors outside of the U.S. to invest in Chinese stocks,” said ETF Trends CEO Tom Lydon.

As such, one ETF to consider is the Xtrackers Harvest CSI 300 China A ETF (NYSEArca: ASHR) as a way for investors to gain exposure to China’s biggest, best and most authentic equities. ASHR was up 0.5 percent on Monday and up 31 percent YTD.

ASHR seeks investment results that track the CSI 300 Index that is designed to reflect the price fluctuation and performance of the China A-Share market. In essence, it’s composed of the 300 largest and most liquid stocks in the China A-Share market, including small-cap, mid-cap, and large-cap stocks.

Without a majority of its holdings in state-owned enterprises compared to FXI, ASHR provides a more authentic and diversified representation of gaining access to the world’s second largest economy.

With China rolling out the red carpet for more foreign investors, it paves the way for firms to be innovative in addition to expanding their product line to access the Chinese markets. Saxo Bank is delighted to announce the launch of Bond Connect, an innovation that allows institutional clients trade Chinese onshore government bonds. Join our bond specialist, Althea Spinozzi, to hear more.

For more market trends, visit ETF Trends

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