Navigating Unchartered Waters
China's Evolving Capital Markets

James Harris, Floyd Mathibela and Katherine Tweedie

Despite the turbulence of the Chinese equity markets, we believe 2015 has been a pivotal year for foreign investors in China. The launch of the Shanghai-Hong Kong Stock Connect and the implementation of a series of market liberalisation reforms have given foreign investors unprecedented access to the Chinese markets.

Investec Asset Management has been investing in China for almost 20 years. During this time we have taken advantage of the successive market liberalisation measures, and have been awarded quotas under both the Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor schemes.

The implementation of a series of market liberalisation reforms have given foreign investors unprecedented access to the Chinese markets.

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Through our experience we have developed innovative approaches to accessing the Chinese markets. In 2015 we launched what we call an All-China strategy, which blends domestically listed A-shares with stocks issued by Chinese companies in other jurisdictions to provide diversified exposure to the long-term Chinese growth story. We have also been granted access to the China Interbank Bond Market, which has enabled us to develop a UCITS-compliant strategy focusing on high-quality listed corporate notes and sovereign bonds. Stock Connect provides another avenue for us to explore new approaches to investing in China and expand our long-term exposure to the evolving Chinese economy.

We want to position ourselves to maximise this opportunity for our clients, while seeking to embed our relationships in China and become a partner in the country’s internationalisation trajectory.

Past performance is not a guide to the future and investments carry a risk of capital loss. Investment in mainland China may involve a higher degree of risk of financial loss when compared to countries generally regarded as having more developed legal, political, economic and/or other systems.

Through our experience we have developed innovative approaches to accessing the Chinese markets.

2.2

Connecting China: A New Stock Market Model

Charles Li and Katherine Tweedie

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