Currency-Hedged International Strategies For Exposure To China Reopening

Summary

• Since the end of October, the MSCI China Index has had total returns of almost 45%, while the S&P 500 has returned 7.7%.
• Some investors may want to access the China reopening theme without the volatility of investing directly in Chinese equities, which can be rife with existential geopolitical risk.
• Since last November, when China began to roll back COVID-related restrictions, DXJ has outperformed the MSCI Japan Index by over 4% in local currencies.

Graeme Kennedy

By Hyun Kang & Matt Wagner, CFA

Chinese equities soared following the easing of zero-COVID policies late last year. But is this reopening now fully priced in? And what other opportunities are there around this important macro catalyst?