Page 25 - ARUBA TODAY

BUSINESS Monday 11 June 2018
A25

The world's most exciting stocks may now be in your funds

By STAN CHOE day we would think may-
NEW YORK (AP) — Stocks be 40 or 50 of them are
trading in mainland China investable," Chuck Knud-
have long offered one of sen, emerging markets eq-
market's biggest thrill rides uity portfolio specialist at
— they've roughly doubled T. Rowe Price, said of the
in just one year, only to give A share market. "It's a very
it all back the next — and narrow list, though it's wid-
they're moving into the ened over the last couple
mainstream of fund invest- of quarters."
ing. Last week marked the — Are things improving?
first time that MSCI, a com- Yes, investors say. Compa-
pany whose indexes set nies are making more of an
the benchmark for many effort to engage with inves-
mutual funds and ETFs, in- tors, particularly ones from
cluded Chinese stocks outside China, for example.
called A shares in its widely "It's just gradually improv-
followed Emerging Markets ing over time," said Andrew
index. These stocks trade Mattock, portfolio manag-
in Shanghai and Shenzhen er at Matthews Asia. "You
and had been very difficult don't wake up the next day,
for outside investors to ac- and everything is changed,
cess, unlike shares traded but you see little things like
in Hong Kong. But main- In this June 6, 2018, file photo, a Chinese investor monitors stock prices at a brokerage house in companies' investor rela-
land Chinese markets have Beijing. tions having English as well
been opening up in recent Associated Press as Mandarin materials."
years, and MSCI added — Why the interest in Chi-
more than 200 A shares to shares. stocks on the simple expec- big swings. nese stocks?
its indexes, such as Hang- Actively managed emerg- tation that they would keep Plus, investors still see is- As China's economy, the
zhou Hikvision, a video-sur- ing-market funds aren't re- winning. This helps lead to sues with corporate gover- world's second largest, has
veillance company whose quired to buy A shares, but sharp booms and busts. nance and how much influ- shifted focus from heavy
revenue has surged an av- they will now have to com- — What risks are still there? ence the government has industry toward the coun-
erage of 43 percent annu- pare their performance Even as institutional inves- over the market. In 2015, try's burgeoning consumer
ally the last five years, and against the MSCI Emerg- tors, such as mutual funds, when the A share market class, investors want to get
Kweichow Moutai, a pre- ing Markets index, which increase their holdings of A was tumbling in price, more into the companies that
mium liquor company. does have them. Here's a shares, the retail-dominat- than half the companies in are benefiting from the
This first move is a small one, look at how A shares have ed market is still prone to the market had trading of rise of China's middle class.
relatively: A shares account performed and why they're their shares suspended. Such stocks are more typi-
for less than half of 1 per- such a big deal: "You've got something like cally found in the A share
cent of the MSCI Emerging — How have these stocks 3,000 companies, and to- market, Mattock said.q
Markets index. But a sec- done in the past?
ond phase of inclusions this They have a history of very
summer will bump A shares big ups and downs.
up to 0.8 percent of the in- In 2006, stocks in Shanghai
dex, and more additions more than doubled and
beyond that are likely. then surged another 110
The moves matter for all percent in 2007 in U.S. dollar
types of fund investors. In- terms. But they collapsed
dex funds that track the in 2008 amid the global fi-
MSCI Emerging Markets nancial crisis, plummeting
index bought A shares so nearly 63 percent.
they can track the perfor- One reason for the volatility
mance of the newly con- is how dominated the mar-
stituted index. The iShares ket is by local retail inves-
MSCI Emerging Markets ETF, tors. Unlike big institutional
for example, is one of the investors, who tend to dig
most popular ways to invest into the financials of com-
in emerging-market stocks, panies before deciding to
and it now includes Hang- buy, many of these retail
zhou Hikvision and other A investors piled into winning