Partner and co-founder Karine Hirn will lead the fund, having recently relocated to Hong Kong from Shanghai. The Luxembourg-registered fund has a brief to invest in Renminbi-denominated A-shares listed on China’s mainland stock exchanges in Shanghai and Shenzhen.
The firm says this asset class offers effective risk diversification with historically low correlation to other equity markets.
“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,” said Hirn.
“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.”
Just last week two physically-backed A-shares ETFs were unveiled with Source registering a fund on the London Stock Exchange, and Deutsche Asset and Wealth Management setting up a rival product on the LSE and Deutsche Börse.