AllianzGI debuts its Approved Pooled Investment Fund primarily investing in China A-shares
22/11/2021
Hong Kong - Allianz Global Investors (“AllianzGI”) today announced the debut of its approved pooled investment fund (“APIF”) which invests primarily in China A-shares equity market, the Allianz Choice China A-Shares Fund (“the Fund”), which aims to attain long-term capital growth by investing primarily in this market. .
Philip Tso, Head of Institutional Business for Asia Pacific, AllianzGI, comments: “China A-shares are currently under-represented in emerging-market allocations. However, with the increasing liberalisation of China’s financial markets, A-shares have become an asset class that cannot be ignored. It clearly has risks relative to developed markets, but we expect these to normalise as the market matures. The long-term growth potential is there.”
The Fund is co-managed by Senior Portfolio Manager Anthony Wong and Portfolio Manager Kevin You from AllianzGI’s China equity strategies investment team based in Hong Kong. The co-PMs have an average 17 years of investment experience, and are currently managing USD 17,616 million of assets.1 The Fund will invest at least 70% of its net asset value (NAV) in the China A-shares equity market via the Stock Connect and the Qualified Foreign Institutional Investors regime in the PRC. There are five themes in particular (see Exhibit 1) that are primed for structural growth due to China’s economic transformation.
Anthony Wong, Senior Portfolio Manager at AllianzGI, says: “One of the benefits of the Fund’s A-shares focus is that it will give investors greater exposure to the country’s new economy, which is characterised by an increased role for domestic consumption and higher-value-added sectors. China A-shares also add meaningful portfolio diversification, given their low historic correlation with major equity markets globally.”
China A-shares market comprises more than 4,500 listed companies with a market capitalisation close to USD13.4 trillion as of 30 September 2021 and accounts for approximately 65% of China’s total equity market capitalisation.2 China’s domestic market exhibits low correlation with other widely held asset classes, because it is influenced by unique economic, political and monetary policy considerations. In addition, these companies generate the vast majority of their revenues locally, which is why the market is largely decoupled from stock markets elsewhere in the world. China A-Shares can help to add meaningful portfolio diversification and can help investors access a broader investment universe, reflecting the faster-growing sectors of China’s “new economy".
The Fund is Hong Kong-domiciled and targets investors willing to assume a relatively higher level of risk that comes with investing in medium- and large-sized China A-shares companies. The Fund may invest up to 100% of its NAV in China A-Shares listed on ChiNext Market and/or the STAR Board. As an APIF, the Fund is also eligible as a type of fund that the Mandatory Provident Fund (MPF) Constituent Fund can invest into.
Philip Tso adds that investors should ready their retirement portfolios with new investment opportunities: “In the local retirement investment market, the role of China A-shares as an asset class has been minimal for years. This was the case until the recent relaxation of long-time restrictions regarding A-shares investment in local pension funds. We anticipate that Hong Kong’s retirement market will be rejuvenated.
“The anticipated standalone choice of A-share funds will be another bright spot that will significantly open the city’s working population to a more diversified retirement investment portfolio.”
The information above is provided for illustrative purposes only, it should not be considered a recommendation to purchase or sell any particular security or strategy or an investment product or service or an investment advice or recommendation. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication.
1 Source: Allianz Global Investors, as of 21 October 2021.
2 Source: Shenzhen Stock Exchange, Shanghai Stock Exchange, Hong Kong Stock Exchange, Bloomberg, Allianz Global Investors, as of 30 September 2021.