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THIS MATERIAL IS A MARKETING COMMUNICATION.

China’s Investment Landscape: Finding New Opportunities

China’s economy is rich with opportunity. Growth still outstrips that of developed nations, and the country’s combined equity markets are the second largest in the world. Yet, until recently, they were mostly closed to foreign investors.

These markets are opening up. With stock connects to Hong Kong and London established and the weight of Chinese stocks in global equity indices increasing, the flow of foreign capital into Chinese markets is expected to increase dramatically as investors seize the opportunity to make A-shares an important part of their core portfolio allocations.

Though the current environment is clouded by uncertainty over the ongoing trade tensions between China and the US, in our view the correction in China stock markets offers an excellent opportunity, both for short-term dip-buying and long-term growth. The China-US trade dispute has mostly been priced into China shares, and we are cautiously optimistic that the world’s two largest economies will eventually strike a deal, though the process will undoubtedly be bumpy. Chinese equity fundamentals still give cause for optimism, and from a medium to long-term perspective they are one of the most appealing asset classes.

At the same time, investors are concluding that funds tracking benchmark stock indexes may not be the best way of tapping into the country’s growth story. It is well-established that Chinese stock markets, dominated as they are by retail investors, are not strongly correlated to their counterparts in developed nations. For this reason, investing in a broad China index fund made sense to global equity investors from a diversification point of view, particularly while the range of assets available to foreigners is limited.

However, correlations within the Chinese equity market are also relatively weak. Export-dependent companies are clearly going to be more affected by trade tensions than those with a domestic consumer focus. “Old economy” state-owned companies have different drivers to “new economy” consumer, technology or healthcare companies, as the government pushes ahead with efforts to rebalance the country for future growth. Even within the new economy, data shows that shares within sectors such as healthcare have a low interconnection with sectors like IT.

Thus, a fund holding a broad mix of Chinese firms whose shares move in different directions under different conditions is less likely to deliver long-term outperformance. On the other hand, this sectoral divergence creates opportunities for more active strategies, which now can be realised thanks to the liberalisation of the China A-share market.


As a result, we have seen China thematic investing growing in popularity, and that trend is likely to gather pace as international investors gain greater access to the wider ecosystem of Chinese shares. Rapid advancements in technology and changing demographics are transforming existing paradigms throughout China’s economy, and this is creating the ideal environment for investors to drill down into the opportunities presented by disruptive growth industries.

As a leading innovator in exchange-traded funds, Mirae Asset Global Investments (HK) Ltd has become the first to offer thematic ETFs in two disruptive growth sectors that until now have been the domain of venture capital and private-equity investors: the Global X China Cloud Computing ETF and the Global X China Biotech ETF.

Both funds follow Mirae’s thematic investment philosophy, focusing on a medium- to long-term horizon that doesn’t rely on market timing. First, we identify high-conviction themes that are the product of observable structural (rather than cyclical) changes in demographics, technology, social behaviour or regulatory environments. Then we find a group of publicly traded companies with high liquidity that provide exposure to that theme.

With the biotech and cloud-computing funds, Mirae offers the wider investor community the opportunity to share in the enormous potential of these two industries in the world’s second-largest economy.

This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service. The views and information discussed or referred in this document are as of the date of publication. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements.

Investment involves risk. Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.

Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (HK) Limited (“MAGIHK”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.[/vc_column_text]


Disclaimer & Information for Investors

No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only.  It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.

The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements.  Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.

Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.

Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.

Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.

The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.

A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.

The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.

Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.

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