For Investors, A Better Way To Look At China
Dec 31 2014 @ 03:23 PM
China is slowing down. Who cares.
Investors in the iShares FTSE China (FXI) exchange traded fund remain far behind the equity growth story that´s been taking place on the mainland, despite relatively lackluster economic data. The iShares product remains heavily tied to Hong Kong dollar denominated shares, or H-shares, of banks listed in Hong Kong. That ETF is up 8.63% while the Deutsche Bank X-Trackers CSI 300 A-Shares (ASHR) ETF is up 50.85%. American investors have not discovered this ETF yet. Volume on ASHR averages just over 100,000 a day, while FXI daily volume is over two million.
After three years of slowing growth, China is at a crossroads, says Andrew Wang, a fund manager at Runnymede Capital Management, a Morristown, N.J. based registered investment advisor.
“The good news is that China appears committed to a road map for furthering economic reforms in order to maintain its resilient economy,” says Wang. The plan seeks a new growth model more dependent on domestic consumption and the service sector, marking a transition to a “new normal” of slower but more sustainable economic growth of around 6%. “Critics have been calling for a hard landing for many years, but in 2015, all eyes will be on whether China can achieve 7% growth and a soft landing,” he says.