BNP: Guter Zeitpunkt um A-Shares zu kaufen?

From last November to this May, Chinese equity markets did well, rising after a five-year period of flat performance and gaining more than 60%. But in June, the offshore A-shares market experienced a sharp correction, mainly due to tightened margin financing regulations. Aiming to restoreinvestor confidence, China took a series of measures in early July to stabilise the market and rebuild investor sentiment. We expect the market worries to fade gradually, enabling the A-shares market to resume the uptrend, albeit at a more sustainable pace.

The eventual inclusion of A-shares in the MSCI global market indices could add momentum when the uptrend resumes. There is no precise timing for the addition of A-shares to these benchmarks, which has become more likely as onshore Chinese equity markets open up to foreign investors, but inclusion appears to be a given now that MSCI in its latest Market Classification Review announced that it expects to incorporate A-shares in the indices after a number of issues have been solved. With the China Securities Regulatory Commission (CSRC) and MSCI forming a working group to tackle those issues, we believe that A-shares inclusion is now just a matter of time. With such a move becoming more imminent, investors worldwide are likely to start working on gaining adequate access to the domestic market. This could be done through the Stock Connect initiatives, the QFII (Qualified Foreign Institutional Investors) and RQFII (Renminbi Qualified Foreign Institutional Investors) schemes or through the products and services offered by investment managers.

Since China represents 12.3% of global GDP, but has a weight of only 1.8% in global mutual funds, we believe there is ample scope for a reweighting as Chinese financial markets open up further. Overall, such a reallocation by global investors could last one to two years, encourage flows from international investors into China and support A-shares.

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