Foundations of Dedicated China Allocations: Part 2

In the second installment of “Foundations of Dedicated China Allocations,” we focus on configurating and implementing a dedicated China program.

We discuss quantitative and qualitative criteria that can be used in sizing the allocation based on market opportunity, economic growth and fundamentals, level of currency internationalization and other areas of targeted outcomes.

We also examined style-factor and sector exposures across China’s major share classes. For example, as shown below, Hong Kong (HK) and overseas-listed companies offered more opportunities in the communication services and consumer discretionary sectors, while mainland-listed A shares and HK-listed securities had greater exposure to financials and real estate.

Sector Difference by Share Type: MSCI China Index

Data source: MSCI Index Database as of Dec. 31, 2020