In December 2018, Global X expanded its China Sectors Suite to offer ETFs covering each of the 11 sectors under the Global Industry Classification Standard (GICS). Chelsea Rodstrom, Global X Research Analyst, participated in an “Issuer Spotlight” interview in March with the New York Stock Exchange to discuss the offerings, the latest on A shares, and our long term outlook on China.
Why did Global X ETFs decide to launch a full suite of China sector ETFs?
Historically, many investors have taken a broad approach to China, either gaining exposure through emerging market index funds or buying a China-focused ETF. ETFs targeting specific sectors in China, however, offer a more nuanced way of gaining exposure to the world’s second largest economy. They allow investors to refine existing exposures to the country, play divergent sector performance and technicals, modify valuations and growth characteristics, harness long term themes, or respond to macroeconomic developments. As China continues to play an increasingly important role in the global economy and capital markets, we believe investors will turn to China sector ETFs to capture their regional exposure.
What are your thoughts on China A shares?
China A shares are domestically-listed stocks in China that have historically been difficult to access for foreign investors. Instead of investing in A shares, foreigners have often focused on a narrower set of H shares listed in Hong Kong or ADRs of Chinese companies listed in the US. But as China further opens its domestic equity markets to the rest of the world, A shares are becoming increasingly available, allowing for a greatly expanded opportunity set of Chinese equities. Last year, MSCI began including A shares in its MSCI Emerging Markets Index as well as many of its China-specific indexes such as those tracked by our sector ETFs. Ultimately, we believe this inclusion of China A shares is a positive
