China A-Shares

We have over three decades of experience applying our systematic investment process in nascent markets. As early entrants in Emerging and Frontier markets, we have been investing in Chinese stocks for over two decades and are now applying our considerable experience to a dedicated China A-shares strategy.

An elevated level of market inefficiency combined with comprehensive data and intensifying market-reform efforts create a compelling investment opportunity. We encourage you to engage us on all matters related to the onshore Chinese equity market and how this burgeoning class of equities, linked to the second largest economy in the world, might fit within your investment program.


Strategy Overview

There are a number of paths to accessing China A-shares. Generally, the vast majority of the investable universe remained inaccessible until the launch of the Hong Kong Stock Connect programs. Although widely popular, these entree points provide only partial access. Chinese regulators have granted us the authority to trade A-Shares locally, granting us full market access to the complete security universe.

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A Quant Approach

We have calibrated our risk and return forecasting frameworks to suit the unique dynamics of this market. We see this as the next frontier in our history of applying systematic investment strategies in emergent capital markets.

Quick Takes

Brief observations on the China A-shares market.

Recent inflows from offshore investors into onshore Chinese equities have been particularly focused on growth-oriented stocks. We note that this focus, ignores the long-term success of value investing in China and exposes these investors to a potential style rotation.

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The current drawdown has unfolded without abnormal suspension activity, in our view underscoring China’s commitment to and progress towards market liberalization.

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A number of frictions within the market reduce shortable A-Shares inventory and increase borrow costs, especially in smaller companies.

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The recent elimination of investment quotas attached to the QFII and RQFII licensing programs marks further progression of onshore market liberalization. 

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Although we still see suspensions as a material risk, the recent trend in suspensions represents a positive step toward the alignment of A-shares with international institutional standards.

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