The US bank Morgan Stanley has raised its outlook for Chinese equities after years of recommending that investors underweight them in their portfolios.
Other major banks such as Goldman Sachs, JP Morgan and UBS had previously pointed to opportunities on the Chinese market.
After years of investors asking themselves how they could reduce the China weighting in their portfolios, the aim now is to increase the proportion. Based on data from the comparison platform ExtraETF Handelsblatt presents the four best ETFs this year, which manage at least 100 million euros and with which investors can easily invest in the Chinese market.
The most successful China ETF this year tracks the performance of the Hang Seng Tech Index. It has already gained almost 26%. The index includes the 30 largest technology companies from the Greater China region that are listed on the Hong Kong stock exchange.
In second place is an ETF on the MSCI China Technology Index. It has gained a good 17% since the beginning of the year. This means that almost all of the losses since the fund was launched in December 2021 have now been recovered.
The China ETF in third place also tracks a tech index: the "CSI Overseas China Internet Index". It is made up of Chinese companies whose main business relates to the internet and which offer similar services to Amazon, Google, Facebook, Ebay and X in the US.
It has already risen by a good 16% this year. To reach its record high from 2021, it would have to rise by a further 55%.
Products based on the MSCI China spread investor capital much more broadly than the three ETFs presented above. This allows investors to invest in large and medium-sized companies from China. The index contains almost 600 shares and covers around 85% of the Chinese market. The corresponding ETF is up 16 percent.
The valuation of the MSCI China is significantly lower with a P/E ratio of 13. If the rally broadens, the index could therefore have more catch-up potential. The US bank Morgan Stanley named it on Thursday as one of the best ways to invest in Chinese equities.
In addition, the stock market value fluctuates less strongly. During the crisis, the MSCI China slumped slightly less than the tech index: the former fell by 44% from February 2021 to September 2024, while the latter fell by 61% in the same period.
However, Jean-Marie Mercadal, head of asset manager Syncicap in Hong Kong, has one general point to consider: the current stock rally is overshadowing the poor economic sentiment in China. He therefore recommends: "Investors should observe the "Two Sessions" annual meeting of the People's Congress from March 5. By then, the government should be in a position to assess consumer sentiment."
Source (excerpt): Handelsblatt, 02/22/25 | Graphic: ChatGPT
