200 CICC A-share corporate cards: A handbook for investing in China
Accessing China A-shares: the US$7trn market
The MSCI’s forthcoming decision by the end of February 2019 to raise the China A-shares inclusion factor of China A Large Cap securities from 5% to 20% in two phases (possibly in May and August 2019) triggers the possibility of more global investors to participate in the onshore China market.
To help overseas investors to invest in China A-shares, we have compiled a handbook containing basic information of 200 pure A-share companies in a corporate-card format, called the “CICC A-share corporate cards”. The 200 stocks are displayed alphabetically, with key information on the company background, shareholder structure, current business, future development and our investment recommendation.
We adopt the following criteria to select the 200 A-shares:
We focus on the names included in the MSCI China basket. In accordance with the MSCI announcement, we expect the 234 names, which including 181 names of pure A-share, to be the preliminary focus list for global investors. We select 119 of our 200 A-share names from the stocks pool and 81 non-index stocks. Basically, they meet MSCI’s requirements of size of market capitalization and accessibility- e.g., MSCI defined large caps; eligible for northbound Stock Connect trading; and currently not suspended from trading and with no record of prolonged suspension (i.e. more than 50 days in the past 12 months).
We exclude A/H dual-listed companies. It is easier for international investors to gain information and access to the A/H dual listing companies, and they are probably already familiar with most of those names.
We mainly include stocks that CICC rates Buy or Hold. The selected A-shares generally have solid fundamentals, sound corporate governance, and reasonable valuations. The 200 A shares should be the corner stone for international investors to participate in the PRC domestic stock markets.
The CICC A-share 200 list generally represents good quality China companies and leaders in each individual industry. This list covers 66% of pure A-share names in the 181 MSCI inclusion basket and around 75% in term of market capitalization.
With 20 years of research experience in the Chinese capital market, CICC always has in-depth understanding of China’s economic environments, government policies, and industry regulations. Currently, CICC covers 670 A-share companies as well as 325 Chinese equities listed overseas. Looking forward, we believe the raise of inclusion factor of A-shares from 5% to 20% in MSCI Emerging Market Index should continue to draw investors’ attention, both overseas and domestic, to the China domestic A-share market.
China’s standing as the second largest economy in the world, we believe that the A-share market will play an important role in the international capital markets, and will become an essential target for global investors to allocate their resources. We hope our 200 CICC A-share corporate cards will be the telescope for international investors to have their first glance of this brand new territory.
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