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Franck Fayard, Director, Head of Product Engineering, Asia, Commerzbank, discusses the performance and attractiveness of Chinese equities and how they have created an innovative index to tap exciting sectors within the Chinese economy.
The year 2017 has generally been a great year for equity markets worldwide, where China has been one of the largest beneficiaries of the bull run.
“Across the Asian region, from Singapore to Hong Kong, Bangkok to Seoul and Japan, investors have made very good money from Chinese equities listed in Hong Kong and the US in 2017,” says Fayard.
Looking ahead, most of these investors are likely to remain invested in this market and perhaps even increase their exposure in expectation of continued returns, he opines.
According to Fayard, Commerzbank is bullish on China, evident in the fact that they have created a new index – CS China Private Elite Index and have innovatively included stocks from bubbling sectors in Chinese economy.
Commerzbank teamed up with China Exchange Services (CES), which is a joint venture of stock exchanges from Shanghai, Shenzhen, and Hong Kong, to create this innovative index. “The primary goal is to fill the gap left by major indices which investors currently use to track Chinese companies,” explains Fayard.
The current benchmarks are not offering exposure to the most exciting sectors of the Chinese economy by being too focussed on state-owned companies and financial companies, says Fayard.
Fayard explains that investors can access the index via custom-made products that range from certificates, notes, swaps or options. One of the best ways to engage the index is to get Delta One certificates from Commerzbank, which provides one-to-one return from the index, less a small management fee, he says.