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China A-Shares: Too Big to Ignore

Many global investors own an incomplete China portfolio and have overlooked the potential strategic role of China A-shares in their global portfolio, deterred by benchmarking, accessibility and operational concerns. As the China capital market liberalizes, China A-shares could well become part of global equity investors' opportunity set. Valuation and investment outlook considerations aside, adding China A-shares to a global equity portfolio could potentially provide enhanced diversification and improve the potential to capture a long-term economic growth premium. Our analysis shows that there are significant differences in the fundamental characteristics of the MSCI China and MSCI China A indexes. Together, they can provide a more complete and representative proxy for China GDP.