KraneShares introduces China all-share ETF in Europe

Oct 16th, 2023 | By | Category: Equities

KraneShares has expanded its ETF suite in Europe with a fund that offers investors diverse access to China’s equity market across all major share types.

Jonathan Krane, CEO and Founder of KraneShares

Jonathan Krane, CEO and Founder of KraneShares.

The KraneShares ICBCCS S&P China 500 Index UCITS ETF is listed on London Stock Exchange in US dollars (CHIN LN) and pound sterling (CHIP LN) as well as on Deutsche Börse Xetra (CHIN GY) and Borsa Italiana (CHIN IM) in euros.

KraneShares notes that China has the world’s second-largest economy and equity market with a total market capitalization of over $9 trillion yet only 7% of the country’s Mainland stock market is currently owned by foreigners.

Numerous ETFs focusing on China are already accessible in Europe, but they often restrict the range of share classes included. CHIN differentiates itself by treating China as its own asset class, offering an investment approach that more accurately mirrors the ongoing developments in the Chinese economy.

The fund tracks the S&P China 500 Index which consists of China’s top 500 companies by market capitalization and liquidity across multiple listing locations, including Mainland China, Hong Kong, and the United States.

Multiple Chinese share classes are eligible for inclusion, including A-shares and offshore listings, subject to meeting minimum size and liquidity requirements.

The index is weighted by float-adjusted market cap while ensuring that the sector allocation remains reflective of the broader Chinese equity market. Rebalancing occurs semi-annually in June and December.

As of the end of September, the index’s largest sector exposures were financials (16.9%), consumer discretionary (15.0%), information technology (13.1%), industrials (12.9%), and materials (10.0%).

The largest holdings in the fund, meanwhile, included Tencent Holdings, Alibaba, China Mobile, China Construction Bank, and Ping An Insurance.

Upon its launch, CHIN swiftly integrated a pre-existing ETF that employed the same investment strategy, initially introduced to the market in 2016 via a collaboration between Hong Kong-based asset manager ICBC Credit Suisse (ICBCCS) and WisdomTree. ICBCCS continues its partnership with KraneShares for this ETF, serving as a sub-adviser and aiding in the management of the fund’s portfolio.

Commenting on the firm’s newest investment solution, Jonathan Krane, CEO and Founder of KraneShares, said: “We believe China is an asset class in its own right. China’s equity market, the second largest globally, presents an unparalleled growth story backed by its powerful economy and growing middle class. CHIN enables investors to leverage the strengths of the top 500 Chinese companies while also potentially benefiting from sector diversity and liquidity.”

Xiaolin Chen, Head of International at KraneShares, added: “We are excited to deepen our relationship with ICBCCS and bring this exceptional product to investors across Europe. We strive to offer investors the best solutions for accessing China’s capital markets, and CHIN is a welcome addition to our growing suite of UCITS products.”

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