A-shares received a boost after the launch of the Shanghai-Hong Kong Stock Connect in November, followed by a series of monetary easing measures.
The bullish sentiment and onshore liquidity then started to spill over into the Hong Kong market from early April after China allowed domestic mutual funds to access the Stock Connect and investors started noticing the discount of H-shares versus A-shares.
More Greater China stock market links are in the works. Hong Kong is expected to connect with the Shenzhen market sometime this year. In a separate development, a Taiwan-Singapore market link is likely to be launched on 1 July, according to reports.
Amid these developments, China’s stock market has overheated, according to managers like BlackRock and Schroders, who recently warned on the rally in share prices.
Against this backdrop, Fund Selector Asia takes a look at Fidelity Greater China Fund and JP Morgan Greater China Fund.
The Fidelity fund has been in operation since October 1990 whereas the JP Morgan product was launched in May 2001.
Despite its relatively longer track record, the Fidelity fund is comparatively small in size with $584m in assets under management on 31 March. The JP Morgan fund had $1.6bn in AUM.
Ryan Sim, head of investments for global wealth management at OCBC Bank, provides a comparative analysis.
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Both the Fidelity fund and the JP Morgan fund invest in companies listed in China, Hong Kong and Taiwan.
Both funds have a bias toward large-cap companies in their portfolios, Sim said, citing data sourced from Morningstar.
