News

No to A-shares, says smart beta provider

Chinese_stock_quotesA major provider of smart beta investment tools says Chinese mainland-listed A-shares are not accessible enough to join its indices. Unlike index providers such as MSCI and FTSE Russell, which have said they will add A-shares to their emerging market indices, Scientific Beta, an initiative of the Edhec-Risk Institute, has concluded that accessibility constraints still “penalise” its global clients. In a statement, Scientific Beta said it was concerned by the need for derivative products based on A-shares to be pre-approved, by the large number of suspensions affecting A-shares as compared with other emerging markets, and by the daily limit on the Stock Connect scheme. Stock Connect is one of the main ways international investors can buy and sell A-shares. The index provider also noted that the market for securities lending and borrowing in China is limited. “The investment community has agreed that the Chinese equity market has undergone substantial changes in terms of accessibility to institutional investors, but Scientific Beta considers that increasing the number of Chinese stocks in an investment universe dedicated to smart beta is not appropriate at this time and could lead to investability issues for non-cap-weighted indices,” said the company. Instead of including A-shares in its indices, Scientific Beta has made Chinese ADRs (American Depositary Receipts) eligible for inclusion in its universe. ©2018 funds global asia

Executive Interviews

INTERVIEW: Operational challenges

Jun 09, 2018

Caroline Higgins of Northern Trust tells George Mitton about A-share inclusion, ETF Connect and why Cayman funds predominate in the region.

INTERVIEW: Making a name

Apr 18, 2018

Formed by a merger in 2012, Old Mutual Global Investors was little-known in Asia. Carol Wong, managing director for Asia-Pacific, is changing that. She talks to George Mitton.

Roundtables

SINGAPORE ROUNDTABLE: Optimism versus caution

Oct 23, 2018

The impact of financial technology, developments in Asian passporting and the promise of new markets in Thailand were among the topics discussed by our panel. Chaired by George Mitton in Singapore.

HONG KONG ROUNDTABLE: a long-term project

Jun 09, 2018

Our panel discussed robo-advisers, ETF Connect, and why the mutual recognition of funds (MRF) scheme will take time to develop. Chaired by George Mitton in Hong Kong.