Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
Standard & Poor's claims the new index will be the most comprehensive equity market benchmark for local and international investors in China. The index provider says it will be the first to include all A-share stocks listed on the Shanghai and Shenzhen Stock Exchanges and to provide full sector breakdowns for those markets.
Recently appointed CEO Leon Liang says: "We are providing the broadest possible benchmark for Chinese stocks. And we are helping to further integrate ChinaÆs equity markets into the international market, by providing a globally recognised and consistent framework for evaluating Chinese sector investments."
The new S&P index will cover the whole universe of Chinese stocks, but rival index providers dismiss the new index as "too little, too late". One rival says the S&P/Citic index offers "very little value added" to the current market leader, the FTSE/Xinhua series û and particularly its established All-Share Index, which was launched more than five years ago, and covers more than 95% of listed Chinese stocks
The FTSE/Xinhua series has had benchmarks and tradables covering A-shares on Shanghai and Shenzen since 2001, and now claims to have a 35% share of the Chinese market, in terms of assets under management.
Current FTSE/Xinhua clients using indices in domestic China include the National Social Security Fund, China Life, Galaxy and China Nature. Total domestic assets tracking the indices are RMB70 billion, as of the end of last month.
One rival provider says: "It would be interesting to know what pipeline S&P has for conversion from FXI or other domestic index provider benchmarks." She acknowledges the S&P/Citic index provides more granularity in the sector breakdown, but questions if that's worth the costs of switching indices.
The new S&P/CITIC Composite A-Shares will be compliant with Global Industry Classification Standard (GICS), a classification system developed by S&P and MSCI in 1999 to list all stocks according to their primary economic activity.
The FTSE/Xinhua series, in contrast, uses the ICB system, which has gone from scratch to hold a 50% global market share since it was launched two years ago.
A spokesman for S&P said she was confident domestic and overseas investors would now start using the new series to benchmark their portfolios against the overall market, but declined to comment on whether managers were likely to switch to the new series.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains