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New FTSE Russell index first to combine China A Shares and H Shares

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FTSE Russell, the global index provider, has created a new index, the FTSE China A-H 50 Index, which is the first FTSE Russell index to represent the largest companies listed in mainland China (A Shares) and/or Hong Kong (H Shares). 

The index has been licensed by Deutsche Bank for Exchange Traded Funds (ETFs) listed on London Stock Exchange and Deutsche Börse AG. The FTSE China A-H 50 Index consists of A Shares and H Shares, but only one share class will be selected to represent each company, i.e. either the A share or the H share. The selection process will take place at each quarterly review. For companies with only an A share listing, the A shares will be selected for index inclusion. For companies with a listing of both A shares and H shares the share class with the lower price will be selected for inclusion. An additional buffer screen is also applied to existing constituents to reduce index turnover. Once selected the relevant share classes are weighted by their respective A share investable market capitalisation (i.e. after free float restrictions) at each quarterly review. Mark Makepeace, CEO of FTSE Russell, says: “FTSE Russell has a long track record of working in China, and is the most active benchmark provider supporting international investment in the region. As the Chinese domestic market opens, we continue to develop products that provide investors with a variety of tools to capture different aspects of the market. The FTSE China A-H 50 Index reflects our desire to create new index solutions for the region, as we look to support the diverse range of investment needs.” FTSE Russell has long been seen as the leading international provider of Chinese indexes, offering a number of products to both global and domestic investors, most notably the FTSE China 50 Index and FTSE China A50 Index. Currently, more than half of all non-China domiciled Chinese ETF assets are tracking China-linked FTSE Russell benchmarks. A shares are securities of Chinese incorporated companies that trade on either the Shanghai or Shenzhen stock exchanges. They are quoted in Chinese Yuan. They can only be traded by residents of the People’s Republic of China or under the Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) schemes. H shares are securities of Chinese incorporated companies and nominated by the Central Government for listing and trading on the Stock Exchange of Hong Kong. They are quoted and traded in Hong Kong dollars. Like other securities trading on the Stock Exchange of Hong Kong, there are no restrictions on who can trade H shares. China A-shares are not currently included in FTSE’s standard global benchmarks. The region has been on FTSE’s Watch List since 2005 and FTSE’s Country Classification Committee has been able to monitor the gradual and positive market developments with respect to a number of key areas of FTSE’s Quality of Markets Matrix.  

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