A new way for SGD investors to tap the biggest stocks in China’s A-share market

What is the FTSE China A50 Index?

The FTSE China A50 Index (the “Index”) is one of the most recognised China A-share indices. Launched over 20 years ago, it comprises China’s 50 largest A-share companies listed on the Shanghai or Shenzhen stock exchanges. These 50 stocks represent about one third of the entire A share market by weight.

Why China A shares?

The A share market is popular among investors seeking exposure to China’s domestic growth potential. A-share companies typically serve the domestic market and as such, generate the bulk of their revenue from Chinese consumers. This makes them relatively better positioned to weather ongoing US-China trade tensions, and are better placed to benefit from China’s stimulus plans.

Eight benefits of the UOBAM FTSE China A50 Index ETF (“the Fund”)

#1. Exposure to big name stocks

The Fund offers investors access to some of the most well-established stocks in the China A-share market. These include well-known names such as liquor giant Kweichow Moutai, battery maker Contemporary Amperex Technology (CATL), and the Industrial & Commercial Bank of China (ICBC).

These companies reflect some of most important themes within China’s modern economy, including decarbonization, financial services and domestic consumption.

Source: Bloomberg, as of 28 Feb 2025

#2. Potential to outperform in market rallies

China’s large cap stocks have outperformed their smaller cap peers during recent market rallies. This is because popular indices and ETFs that benefit the most from foreign investor flows, tend to feature large cap stocks. As a result, in 2024, when the China market rallied on the back of stimulus measures, large cap indices like the FTSE China A50 Index outperformed all cap indices such as the FTSE China A All Cap.

Source: FTSE, Index performance relative to the FTSE China A All Cap Index (in CNY). Data as of 29 November 2024, based on three years of historical data

#3. Potential resilience in down markets

Large cap stocks also tend to be more stable given the companies’ strong brand presence and significant market share, especially during times of economic uncertainty. This is because investors are more inclined to hold on to such stocks for their dividend payments and good fundamentals, despite downward market pressures.

Source: FTSE, Index performance relative to the FTSE China A All Cap Index (in CNY). Data as of 29 November 2024, based on three years of historical data

#4. Denominated in SGD

The Fund is listed on the Singapore Exchange (SGX) and offers trading in SGD. This is particularly appealing for Singapore investors who do not want to bother with currency exchange issues. The majority of China-focused ETFs are listed in Hong Kong or the US, and offered in HKD or USD, which is inconvenient for investors whose wealth and portfolios are SGD-based. Singaporeans can also buy into the Fund using their SRS funds. There are no Customer Account Review (CAR) requirements as the Fund is an Excluded Investment Product (EIP).

#5. Diversification across key industries

China’s economy has transformed significantly over the past 20 years and the FTSE China A50 Index has evolved alongside. The country’s focus on innovation and consumption-led growth have increased the weighting of consumer, technology and healthcare companies within the Index. Such companies now make up 39 percent of the Index, three times more than in 2015. In contrast, financials, which made up more than 60 percent of the Index a decade ago, now occupies just a third of the index. By investing in the Fund rather than individual stocks, investors ensure that they are in lockstep with the changing face of China’s economy.

#6. Regular dividend payments

Another benefit of the Index’s large cap exposure is the potential for attractive income. Large cap companies tend to have more room to pay dividends compared to growth-focused smaller caps. The average dividend yield for the FTSE China A50 index is 3.6 percent compared to the all-caps average dividend yield of 2.4 percent. The Fund aims to provide annual distributions¹, making it an appealing choice for income-seeking investors.

#7. Low cost and transparent

The Fund offers ongoing exposure to China’s biggest stocks via a single vehicle, based on a quarterly rebalancing cycle. This means that if a stock shrinks in size and is no longer a Top 50 stock, it will be automatically replaced without investors needing to keep track. Additionally, to prevent excessive turnover, there is a buffer zone in place around the 50th ranked stock.

#8. No minimum board lot size

The Fund, as a Singapore-listed ETF, can be bought from just one unit, in contrast to most Hong Kong listed ETFs, which usually require a minimum lot size of 100 units. This makes it easy for investors to tactically allocate to the ETF as part of a well-diversified portfolio.

^{Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund's prospectus.}