A chance to invest in Chinese stocks

Till now there were not too many opportunities for Indians to invest in Chinese stocks. That, however, is all set to change thanks to the Benchmark Mutual Fund (BMF) exchange traded fund on the Hang Seng Index, the main index of Hong Kong Stock Exchange.

The mutual fund offer is waiting for a Securities and Exchange Board of India (SEBI) approval. “With this fund, Indian investors can have exposure to Chinese companies,” says Rajan Mehta, Executive Director, BMF. He says 50-60 per cent of the Hang Seng Index components are Chinese companies. Some of the leading companies in the Index include; Bank of China, China Life Insurance Company, China Mobile, Petro China and CNOOC. These five alone enjoy a weightage of over 25 per cent in the index.

While the fund will invest in the companies of the Hang Seng Index, its net asset value will be in Indian rupees. The minimum investment will be Rs 10,000, making it the first of its kind index fund to be launched in india.

China’s main index Shanghai Composite Index trades at PE ratio of 24-25 compared to 14-15 times for the BSE Sensex. The Chinese stock market, the best performing in the world in 2009, crashed in August and is currently down by half from November 2007 peak. There are worries that an increase in bank lending, which has helped drive the Chinese market, might see a rise in bad loans.

Advantage Hang Seng ETF

• First index fund on an international index.
• 50-60 per cent of index components are Chinese companies.
• Investment in Indian rupees.
• To be listed on NSE.