New China A-H 50 Index ETF will aim to capture price differential between A-shares and H-Shares

Deutsche Asset Management has listed the db x-trackers Harvest FTSE China A-H 50 Index UCITS ETF (DR), managed by Harvest Global Investments Limited….

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Marco Montanari, Deutsche Asset Management’s Head of Passive Asset Management, Asia-Pacific

The fund tracks the FTSE China A-H 50 Index, which aims to capture price differentials between China’s domestic A-shares stocks and the same companies’ share classes listed as H-shares on the Hong Kong market.

The FTSE China A-H 50 Index tracks the largest 50 China A-shares companies by market capitalization but invests in the lowest-priced share class between the A and H share classes. Dual-listed mainland China shares often trade at different prices, even though the two types of shares enjoy the same voting rights and dividend payments. H-shares on dual-listed stocks currently trade at a discount to their A-share equivalent1.

“This is the first ETF of its kind listed in Europe,” says Marco Montanari, Deutsche Asset Management’s Head of Passive Asset Management, Asia-Pacific. “The pricing differential between the A-shares and H-shares markets may relate to factors such as capital control measures in the Chinese onshore (A-shares) market, and differences in the investor base. In the long run the price differential may close as China’s capital markets open up, but in the meantime our new ETF is a straight forward way for investors to maintain exposure to the ‘cheaper’ share class of dual-listed companies on an ongoing basis. And if the gap does close over time then those investors that have automatically had ongoing exposure to the lower-priced share classes will benefit.”

The index rebalances on a quarterly basis, which means included stocks are screened every three months to ensure exposure to the lower-priced share classes.

James Sun, Harvest Global Investments Limited’s Chief Executive Officer, commented: “In collaboration with our long-standing partner, Deutsche Asset Management, this ETF is another welcome product offering for investors interested in China. The pricing differentials for some constituents are, at present, in the double-digit range. This new ETF is a simple vehicle to access the China market in a more cost effective way.”

Deutsche Asset Management is at the forefront of providing ETF exposure to China’s domestic A-shares market, with the largest physical China A-shares ETFs listed in Europe and the US2. In July 2014 Deutsche Asset Management listed Europe’s first ETF providing exposure to China’s domestic sovereign bond market.

db x-trackers Harvest FTSE China A-H 50 Index UCITS ETF (DR) is listed on the London Stock Exchange and the Deutsche Börse. It has an annual All-in Fee of 0.65%.

Product Details

Name of ETF:                      db x-trackers Harvest FTSE China A-H 50 Index UCITS ETF (DR)

Share Class:                         1D                

BBG Code:                           AH50 GY/AH50 LN  

ISIN:                                     LU1310477036

Share Class Currency:         USD

Annual All-in Fee:                 0.65%

Physical/synthetic:               Physical

UCITS compliant:                 Yes



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