Investors just got four new ways to buy into China’s stock market “stars.”
Four exchange-traded funds launched in China this week tracking the Shanghai stock market’s Star 50 Index, a collection of the 50 largest stocks on the tech-heavy Star Market. The Star 50 Index is up nearly 50% this year.
While U.S. investors don’t yet have access to the funds — issued by China Asset Management, Huatai-PineBridge Fund Management, ICBC Credit Suisse Asset Management and E Fund Management — there are many reasons for them to be watching this move, one top money manager told CNBC this week.
These ETFs could be some of the first to access the highly anticipated Ant Group IPO, Tim Seymour, the founder and chief investment officer of Seymour Asset Management, told CNBC’s “ETF Edge” on Monday.
The Alibaba affiliate is planning a dual listing on Shanghai’s STAR market and Hong Kong’s stock exchange at a valuation some have said could be bigger than a number of the largest U.S. banks.
“When I say these are some of the biggest companies you’ve never heard of, I’m talking about NetEase or Tencent Music, which is bigger than Spotify if you look at their total audience,” Seymour said.
“Ant Financial is going to come to market and be bigger than almost every other financial company in the world,” he said. “Certainly in payments, it’s going to be a smaller company than Visa and Mastercard, but it won’t be that far off of where JPMorgan is and it’ll be bigger than Bank of America and PayPal and all these other names.”
Although it’s “unfortunate” that U.S. investors can’t buy into these ETFs at the outset, “the size of the market, the size of the opportunity [and China’s] ability to replicate trends we’ve seen over here” cannot be ignored, Seymour said.
“U.S. investors should stay focused on this because arguably, Tencent and Alibaba are two of the most important tech companies in the world and there are a lot of other companies that are coming to market over there every single day,” the CIO said.
