VanEck has announced its Vectors China New Economy ETF (CNEW) will list on the Australian Securities Exchange (ASX) in November.
The new exchange-traded fund would offer Australian investors access to a portfolio of fast-growing China A-shares via single trade on the ASX, the firm said.
Additionally, CNEW would track the CSI MarketGrader China New Economy Index, which is a smart beta strategy targeting Chinese companies from the consumer discretionary, consumer staples, healthcare and technology sectors.
The index would select only China A-shares based on 24 fundamental indicators across four analytical categories such as growth, value, profitability and cash flow.
VanEck’s managing director and head of Asia Pacific, Arian Neiron, said his firm was one of few Australian asset managers that had been granted an exclusive Renminbi Qualified Foreign Institutional Investors (RQFII) licence which enabled it to invest in China A-shares directly and independently of Stock Connect.
“Our RQFII licence gives us the ability to directly invest in China A-shares and gain a broader exposure to the Chinese economy and we are one of only a few local fund managers that can do this,” he said.
“Now, retail investors can tap into the economic boom we are seeing in China and diversify their portfolios into profitable, fast-growing and financially sound Chinese companies.”
Holdings in CNEW would include companies with a very high return on equity (ROE), including liquor maker Kweichow Moutai, which has an ROE of 33.8 per cent and total debt to total capital of just 12.2 per cent.
Another one was Xiamen Kingdomway, a manufacturer and distributor of nutrition enhancers and biomedical products, which has an ROE of 18.4 per cent, the company said.
