Donald Trump has again been talking about increase tariffs so that could potentially be a negative for China but there have been a couple of other pieces of potentially good news for the country.
The first is that the MSCI Emerging Markets Index (this is what most tracker funds or Emerging Markets passive funds will focus on). This index has historically not contained any shares listed domestically in China. It has contained Chinese companies that are listed in either Hong Klong or the US but nothing actually listed in China. But from this month it has said it will be including domestically listed Chinese shares known as A shares. So these will start to be included a few have been included so far in the proportion will slowing increase in the coming months and this will mean that passive funds and ETFs focusing on Emerging Markets will be forced to buy these shares as well so that should be good news for the overall Chinese market.
Second piece of good news comes from the Chinese government say they are getting slightly annoyed about the fact that some major Chinese companies are not listed in China (see an article by FinDuli: Alibaba-is-on-their-way-to-secondary-listing). For example Alibaba and Baidu currently listed in the US and Tencent listed in HK. Chinese government have been talking about some initiatives to relax the Chinese listing rules to allow these companies to list in China as well and if that happens it will mean that perhaps more chinse investors will buy into these companies and it will open up the companies to a wider investor base and that has to be good long term for the valuation.
Picture source: This is Money
Comments