(Yicai Global) Nov. 22 -- Foreign investors are increasingly interested in the Chinese stock market, as talks with chiefs from British asset manager Schroders show.
The Chinese market will become a key area for Schroders' strategic growth, Chinese newspaper 21st Century Business Herald reported, citing Chief Executive Peter Harrison. Harrison spoke at a press conference in London where the firm is headquartered.
In September, stock compiler MSCI announced it may increase its weighing of Chinese stocks, also called as A-shares, from 5 percent to 20 percent in its global benchmarks. The country is also opening up its capital markets to foreigners with the upcoming Shanghai-London Stock Connect, proposed to be launched next month.
Many investors have already invested more in A-shares before the next move from MSCI, said Stephen Kam, a co-head of product management in Asia (excluding Japan). The relatively new market brings investors the enormous chance to become the first, the "Alpha," which is very attractive, Kam added.
The correlation between A-shares and other global capital markets is very low so it allows investors to diversify and hedge against risks elsewhere, Kam said, adding that active fund managers in Chinese bourses have performed better than the market average.
Only 9 percent of Chinese citizens have the passports, which shows how much room for growth there is, Kam said. Listed firms that deal with domestic consumption, technology and automation, medicine, and healthcare are all worth paying attention to, he added.
At the end of the third quarter, the total value of shares owned by foreign investors rose to CNY1.28 trillion (USD184.5 billion), which was 3.2 percent of the entire market, data from the People's Bank of China show. This was a 0.5 percentage point higher than at the beginning of this year, which was before that MSCI increased its weighing of A-shares to 5 percent.
Editor: Emmi Laine