Scientific Beta

ETF Stream: "Scientific Beta has thrown a roadblock in the path of further integration of China A shares into the emerging market index economy after saying their inclusion in its smart beta indices would “not be appropriate”. Instead, the company said it would be relying on a block of one hundred constituents made up of H shares (i.e. Hong-Kong-listed Chinese entities), P chips (Chinese companies listed in Hong Kong but incorporated in the Cayman islands), Red chips (which will often be issued alongside A shares) and depositary receipts, which are modelled after American depositary receipts or ADRs."

ETF Stream 05/04/2019

"(...) Scientific Beta has thrown a roadblock in the path of further integration of China A shares into the emerging market index economy after saying their inclusion in its smart beta indices would “not be appropriate”. Instead, the company said it would be relying on a block of one hundred constituents made up of H shares (i.e. Hong-Kong-listed Chinese entities), P chips (Chinese companies listed in Hong Kong but incorporated in the Cayman islands), Red chips (which will often be issued alongside A shares) and depositary receipts, which are modelled after American depositary receipts or ADRs. The provider said there has been some progress made on the part of the Chinese authorities on the issues of tighter suspension rules and a doubling of the Qualified Foreign Institutional Investor (QFII) quota to $300bn. However, for smart beta indices to work, it said, investors need to have access to solutions where liquidity risk is “thoroughly considered” because ultimately the weights of the stocks will not be equivalent to their cap-weighting but will depend on other weighting criteria. (...)"