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Business Connections
Connect with Australia China businesses through our online marketplace. Job Connections
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Back Issues
| Investing on the A-share Market | | Print | |
| Sep / Oct 2008 | |||
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Sophie Loras speaks to AMP Capital Investors' Asia Equities head Karma Wilson about investing on China's A-share market. In July 2006, AMP Capital Investors was the first and only Australian company to be granted a Qualified Foreign Institutional Investor licence QFII) by China's State Administration of Foreign Exchange allowing the company to invest in China's lucrative and hard to access A-share market. In another milestone, AMP earlier this year also became the first international company to receive an additional investment quota - an increase of US$100 million to its already existing US$200 million. Karma Wilson, Head of Asian Equities, AMP Capital Investors, says the biggest challenge for international investors continues to be obtaining access to China's lucrative A-share market. Despite a decision in December last year by the Chinese to increase the total QFII quota from US$10 billion to US$30 billion, the amount foreign investors can invest in the Chinese Ashare market still represents a tiny fraction of a market worth US$ 2.5 trillion - the fourth biggest in the world says Wilson. At the end of last year just 53 foreign companies had received QFII status. Since the lifting of an 18-month freeze, five more companies have this year received QFII licences - including the Australian company, Platinum Investment Management Ltd. But Wilson says the opening up of the A-share market to foreigners still remains slow. Investing on the Chinese A-share market is significant she says, because it gives investors access to not only the world's fourth largest market, but a bigger market in terms of the variety in shares. While the Hong Kong H-share market is largely represented by the energy and resources sectors, the Chinese A-share market represents a wider variety of stocks. As China moves up the industrial chain for example from manufacturing footwear to machinery and technology, and as the urbanisation drive continues unabatedly as more Chinese move from rural areas to urban cities, disposable incomes in China continue to rise. "Therefore there is an increase in consumer shares, so through the A-share market there is good exposure to these other sectors," says Wilson. "I think the main thing is that that investing in China provides significant opportunities. And those investors looking at the long-term horizon will be rewarded," says Wilson. "There is a global slowdown so it is not so much what is hot, but what is not! And I think for the Australian investor I would not look at individual investments but look at a diversified portfolio. China is an emerging market and is still showing strong GDP growth and so is still displaying good investment opportunities." ■
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