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White Papers

Mapping China’s Rise to Asset Class Status

Is it time to declare that China, the world's second largest economy and equity market, is an asset class? We developed the MAP framework based on comprehensive research covering Market Size, Availability and Portfolio Impact. We made the following observations:

• China's equity market has a $9.2 trillion market cap and is 7% of the global investable opportunity
• Foreign ownership of China's mainland equity market is just 2%, but will grow rapidly with the development of the Hong Kong Connect Program and MSCI's decision to include A-shares in the definition of Emerging Markets
• Treating China's equity market as a separate asset class can produce more efficient portfolios. Over the last 17 years, a 40% China, 60% Emerging Markets ex-China portfolio produced a more efficient return/risk trade-off than a stand-alone emerging markets strategy.

We believe that China is a separate asset class and that portfolio managers should make explicit decisions when it comes to their China exposure.

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All white papers posted were created by the listed authors who are solely responsible for the research, finding and all materials contained therein. Pensions & Investments has not verified or edited the materials (other than for length and style) and does not necessarily agree or disagree with the analysis and positions expressed by the authors. Reference to any company, product or service does not imply recommendation or sponsorship by Pensions & Investments.

For more information on submitting a white paper, please contact Richard Scanlon at rscanlon@pionline.com or 212-210-0157.