East Capital launches China A-Shares fund

Stockholm headquartered East Capital has become the first Nordic manager to receive a quota approval under the Qualified Foreign Institutional Investor QFII) programme, that has enabled it to launch the East Capital China A-Shares fund.

The fund will invest in A-shares listed on the Shanghai and Shenzhen stock markets, which are denominated in renminbi. The fund is registered in Luxembourg and is fully subscribed already, the manager said.

The benefit to investors of such a vehicle is that it opens up exposure to themes and return potential, and does so in a way that provides risk diversification via the historically low correlation to other equity markets, East Capital said.

Karine Hirn, partner and co-founder, said: “The A-Share market offers deeper and broader exposure to the changing dynamics in the Chinese economy and to emerging domestic themes including for instance China’s continued urbanisation, the development of its healthcare sector and the increase in domestic consumption of consumer goods on the back of rising incomes.”

“We also believe that reforms in the financial sector in China and the impending reduction of global investors’ current major underweight to Chinese equities could potentially trigger a re-rating of the market. With valuations in China currently trading at historically low levels and the pace of growth likely to remain higher than in other major economies, the return potential offered by the A-Shares market is significant.”

Hirn has been leading the manager’s Asian operations since 2010 when the firm established an office in Shanghai. Hirn recently relocated from Shanghai to Hong Kong, which together with Stockholm constitutes overall management of the Asian operations.

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