From Morningstar:

The Chinese and Hong Kong stock markets continue to lose value, reflecting a structural slowdown driven by the real estate sector correction and debt restructuring. Foreign investors have drastically reduced their exposure to China, with significant outflows from actively managed equity funds and a decline in European-domiciled China equity ETFs. The government is considering a ¥2 trillion aid package to stabilize the stock market.

The China dip presents opportunities for long-term investors, according to Amundi’s Vincent Mortier. While the short-term outlook is selective and cautious due to the economic slowdown, valuations are attractive and the long-term risk/return ratio looks positive. Other investment professionals also see potential in seizing the opportunity presented by the slump in Chinese assets and equities.

The nature of indices tracked by dedicated China ETFs generally makes passive replication less competitive, with most Morningstar Medalist Ratings in the category being Negative or Neutral. The inclusion of Chinese A-shares remains an ongoing topic of discussion, with potential advantages such as greater market representativeness and disadvantages including the risk of front-running by active managers. The FTSE China 50 focuses solely on Hong Kong-listed Chinese companies and has a selection criterion of limiting stocks to 50.



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