MSCI will include China A-shares in the MSCI Emerging Markets Index
Since 2015, Greystone Managed Investments Inc. has been actively investing in China’s A-share market — one of the world’s largest equity markets. As one of a small number of Canadian firms currently investing in China A-shares, we welcome the recent announcement by the world’s largest index provider, MSCI, that they will include China A-shares in their Emerging Markets index starting next year. We believe that this provides institutional investors further encouragement to invest in the Shanghai and Shenzhen stock exchanges which, with a combined estimated market value of 7.7 trillion U.S. dollars, represent the second-largest equity market in the world.
We see attractive opportunities in the A-share market, including exposure to sectors that are benefitting from China’s rising consumerism, internet-based new economy, and a domestic market that functions as an incubator to help local industry titans become future world leaders. In addition, China A-shares have a low correlation to other asset classes providing investors with significant opportunities to diversify portfolios. In particular, we believe there are opportunities for attractive yield and growth in the China A-share market.
We have been managing a growth-oriented, income focused, concentrated A-shares strategy since 2015, which has outperformed the CSI 300 index by 16.3% (USD annualized as at May 31, 2017) since inception. The Greystone China Income and Growth Fund (the “Fund”) adheres to an investment philosophy and process that Greystone applies across all regional income and growth strategies. The Fund seeks to provide long-term capital appreciation and generate dividend income superior to that generally available in the Chinese domestic equity market. Our concentrated portfolio of approximately 25 holdings focuses on profitable companies with both strong long-term growth trajectory and positive near-term business momentum, of which 20 holdings are currently among the 222 stocks that MSCI referenced.
At Greystone, we are optimistic that the positive change witnessed in China over the past several years will continue to accelerate investor interest. The investment landscape is fertile ground for active managers, and A-shares provide direct and broad-based access to China’s economic growth, which we believe to be relevant in today’s global market and worthy of consideration by institutional investors looking for global diversification.
More information about this event can be found at the following link: