The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

The Chinese index puzzle

Investing in China is tricky enough without having to offer coherent data on performance. Fund managers, under increasing pressure to outperform benchmarks, are struggling with the fact that index providers offer a mystifying range of products covering Chinese stocks.

China indices

Source: Bloomberg

FABRICE JACOB, MANAGING director of Hong Kong asset manager MYM Capital, scratches his head as he spreads sheets of paper across his desk, each with a table purporting to represent a China equity index. MYM is launching a new China fund and he has to choose a benchmark index.


"As a fund manager," Jacob says, "your goal is to outperform your benchmark index. If you outperform by 1%, you might get a bonus; by 2%, you're a genius, that's the way it works. So the benchmark is crucial. Once you've selected it, you're stuck with it - you're married to it."

It sounds simple enough, but look more closely at the constituents of each index covering China and the problems become apparent. Even defining what constitutes a Chinese company is no easy task.

HSI Services, the market leader in the Hong Kong market, produces the Hang Seng Index (HSI), the benchmark for the Hong Kong Stock Exchange. The HSI already includes Hong Kong-listed mainland-China securities, dubbed H shares if they are privatized enterprises or red chips if they are foreign-incorporated companies controlling mainland-China assets.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree