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China bulls set to charge

Why patient investors could welcome big payback from pivot East
China bulls set to charge
  • Mooted repatriation of ADR listings alter the dynamic of China and Asia benchmarks
  • Long term rise of the renminbi a threat to dollar's status as global reserve currency

Rising maturity in China’s capital markets looks set to continue. Restrictions which, in the eyes of the Americans, were needed to redress the balance in trade for goods have failed to halt the progress in China. Indeed, draconian measures put in place by the US to quell the momentum are only stimulating the growth in listings on China’s own exchanges. That’s exciting for investors.

American Depository Receipts (ADRs) have been used by Chinese internet giants like Tencent (NYSE:TCEHY), Alibaba (NYSE:BABA) and JD.com (NYSE:JD) to raise equity finance on the US stock market. The ADRs have been a way for western funds and investors to buy into some of the world’s most exciting companies. Despite having enjoyed a phenomenal bounce back from the market selloffs earlier in the year, these businesses are still much cheaper than American equivalents and therefore still present interesting opportunities for western investors.

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