PETALING JAYA: The long-term prospects of China’s capital markets remain positive despite the recent regulatory crackdown, says Value Partners Asset Management Malaysia Sdn Bhd (Value Partners Malaysia) fund manager Kamal Mustadza.
He said while regulatory uncertainty could affect investor sentiment towards investment in China, the risk was merely temporary.
“The regulatory uncertainty in China is a near-term risk but we are still bullish on China for the long term,” he said.
Speaking at a media briefing after the debut of the group’s VP-DJ Shariah China A-Shares 100 Exchange Traded Fund (ETF) on Bursa Malaysia yesterday, Kamal said the structural growth story of China remained intact.
“China is on track to be the largest economy,” he said, adding that it made sense for investors to have exposure to China in their portfolios.
The VP-DJ Shariah China A-Shares 100 ETF, the world’s first A-share ETF, made its debut on the Main Market of Bursa Malaysia at an initial issue price of RM2 per unit.
The ETF, which was officially launched on July 12, 2021 with an initial fund size of four billion units, is managed by Value Partners Malaysia, a wholly-owned subsidiary of Hong Kong-based Value Partners Group Ltd.
The ETF, which provides investors exposure to syariah-compliant stocks within the China A-Shares equity universe, was last traded at RM2.02 at market close.
Value Partners co-founder, co-chairman and co-chief investment officer Datuk Seri Cheah Cheng Hye said the VP-DJ Shariah China A-Shares 100 ETF adopts a syariah-compliant feature and gives access for the Malaysian public to a basket of high quality, and carefully selected stocks in mainland China.
“Value Partners has been investing in China for the last 28 years, and we are well-known for our strong investment results over the long term.
“We are grateful to Bursa Malaysia for providing the platform, and we hope it will become a global centre for syariah-compliant products to invest in Chinese securities,” he said at the virtual listing ceremony of the ETF yesterday.
Cheah said he was optimistic about China’s economic growth.
He indicated China’s strong growth potential would allow the country to become the world’s largest economy, overtaking the United States by 2030, and that would help generate impressive corporate earnings and dividends.
In addition, he said China’s growing middle class, which could reach 550 million people by 2025, remained a key driver of demand for a variety of products. It was also projected that increasingly more people in the country would reallocate their huge savings away from properties and bank deposits to equities.
“This is another major source of growth for China stocks. In addition, China’s A-Shares have been included in major indices in recent years,” Cheah said.
“The growing foreign interest and participation in the China A-shares market could be a transformative event, giving investors a unique opportunity to optimise global equity portfolios,” he added.
Meanwhile, Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift, in his welcoming speech, said the inclusion of the VP-DJ Shariah China A-Shares 100 ETF would increase the total number of ETFs on Bursa Malaysia to 20, with a combined market capitalisation of RM2bil.
“We believe this is good for Malaysian investors who have become increasingly savvier over the years. It will provide them with new opportunities to diversify their portfolio and income,” he added.