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Executive Summary
The MarketVector™ ZhongGuo AllChina Index (MV1CHN) represents our conviction that a fundamental shift in how investors should view Chinese equity markets is imperative and overdue. As the economic, political and financial boundaries between Mainland China, Hong Kong, and Macau dissolve, legacy Emerging Market and Developed Market classifications and subsequent allocation for Chinese equities are increasingly misaligned with market opportunities.
Key Takeaways
- One China, One Market: Multilateral organizations and government policies now treat China, Hong Kong, and Macau as a single entity. Top-down market, economic structure and market microstructure have followed suit.
- Capital Market Integration: A range of initiatives and regulatory evolution (notably Stock Connect, A-to-H listings, and PRC policy reforms) have created a unified de facto and de jure Chinese financial system.
- Integrated China Exposure: Traditional, well-established global equity benchmarks split China across Developed Market (DM) and Emerging Market (EM) classifications, leading both standard DM and EM indexes to miss the full picture of Chinese equities.
- MarketVector’s MV1CHN Index Solution: A rules-based, float-adjusted, liquid index of the top 300 companies from Mainland China, Hong Kong, and Macau, to provide an All China solution.
Investment Implications: Chinese equities remain deeply discounted by multiple measures. At the same time, government policy is shifting toward greater market support. Evolving dynamics calls for smarter, more integrated exposure, along with allocation strategies that avoid overlap and reflect China’s unified capital market structure.
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