China Allows US Investors Access, For The First Time, To Yuan-Linked Shares In Shanghai And Shenzhen

By @AmruthaGayathri on
People look at an electronic board at a brokerage house in Shanghai
People look at an electronic board at a brokerage house in Shanghai February 25, 2011. REUTERS

China will begin offering U.S. investors more direct access to shares traded on exchanges in Shanghai and Shenzhen, in a landmark move signaling that the country could further open up its financial markets.

China’s securities and foreign-exchange regulators gave the go-ahead to Shenzhen-based Bosera Asset Management Co., which has joined hands with New York-based Krane Funds Advisors, and Beijing-based Harvest Fund Management Co., which partnered with Kansas City, Mo.based-Deutsche Asset & Wealth Management, to sell exchange-traded funds, or ETFs, linked to China’s A-shares, which are denominated and traded only in renminbi, the Wall Street Journal reported, citing an anonymous source, on Wednesday.

Deutsche Asset & Wealth Management announced that the initial capital investment in the db X-trackers Harvest CSI 300 China A-Shares Fund (NYSE: ASHR), as the ETF is named, was pegged at $108 million, the largest for any ETFs since 2007.

“ASHR will provide American investors with direct access to a key international market for the first time, as other ETFs that seek to provide exposure to China A-shares must do so indirectly via derivatives or other instruments,” Martin Kremenstein, head of Passive Asset Management for Deutsche Asset & Wealth Management Americas, said in a statement.

The ETFs provided by Bosera Asset Management also will be listed on the NYSE, the Journal reported, citing a source familiar with the matter.

Currently, most companies listed on Chinese stock exchanges issue two types of shares, A-shares and B-shares, of which B-shares are linked to foreign currencies such as the U.S. dollar and are available to both domestic and foreign investors, while A-shares have so far been accessible only to Chinese investors.

Harvest Fund Management is the second-largest asset management company in China with more than $47 billion in assets under management, according to a statement from Deutsche Asset & Wealth Management.

“ASHR seeks to track the CSI 300 Index, which includes the 300 largest and most liquid securities trading on the Shanghai and Shenzhen Stock Exchanges,” the statement said.

Join the Discussion