Eastspring Investments Islamic China A-Shares Fund

Invest in one of the world’s largest economies

Your doorway to China opportunities with Eastspring Investments.

China is set to overtake the U.S. and claim the global economy’s top spot in about a decade. Since China began to open and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of poverty*. It has been a volatile year for the Chinese market in 2021 and 2022. Following real GDP growth of 8.1 percent in 2021, growth is projected to slow to 5.0 percent in 2022*.

Even more challenging is the fact that market volatility was often more induced by unexpected government initiatives, which has prompted market participants to focus more and more on understanding Chinese government’s policy framework.

However, after each storm comes a calm.

*source: https://www.worldbank.org/en/country/china/overview

Investment Opportunities in an Improving Economy

Investors may still be nervous about Chinese stocks despite massive declines that have made them compelling. China has started to reopen some cities as the worst of the recent Covid wave subsided, and the government is increasing fiscal investment. The recent rebound in Chinese equities, which started in April, is gaining momentum thanks to an improving economic outlook as well as persistent monetary and fiscal stimulus by the Chinese government.

Looking forward, the Chinese government is likely to release more supportive measures (than tightening policies), as it prioritizes reaching its GDP growth target in a year of government reshuffling.

Start your China investment journey with Eastspring Investments

Begin investing in funds with exposure in one of the world's largest economies.

Fund Name1 year3 years5 years YTDSince InceptionVF/VC
Eastspring Investments Dinasti Equity Fund-28.71%6.10%2.17% -22.47%102.05%17.6**
Eastspring Investments Islamic China A-Shares Fundn/an/an/a n/an/an/a

*Data shown as at 31 July 2022. Performance figures are sourced from Lipper for Investment Management. The performance is calculated on NAV-to-NAV basis with gross income or dividend reinvested. Past performance is not necessarily indicative of future performance. Eastspring Investments Islamic China A-Shares Fund launched on 13 September 2021.
** Based on the Fund’s portfolio returns as at 29 July 2022, the Volatility Factor (VF) for this Fund is 17.6 and is classified as “High” (Source: Lipper). “High” generally includes funds with VF that are higher than 14.21 but not more than 17.635. The VF means that there is a possibility for the Fund in generating an upside return or downside return around this VF. The Volatility Class (VC) is assigned by Lipper based on quintile ranks of VF for qualified funds. VF is subject to monthly revision. The VF for the Fund may be higher or lower than the VC, depending on the market conditions. The Fund’s portfolio may have changed since this date and there is no guarantee that the Fund will continue to have the same VF or VC in the future. Presently, only funds launched in the market for at least 36 months will display the VF and its VC.

Here’s your chance to win additional investment units when you invest from 1 September 2022 to 31 October 2022!

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Why invest in China?

Economic Superpower

Already the world’s second largest economy, China is expected to account for close to 20% of global GDP by 2024 (See Fig.) and make up more than 35% of global GDP growth1. Since opening up to foreign trade and implementing free-market policies in 1978, the Chinese government has continued to roll out a series of reforms to create a more sustainable growth model, powered by consumption and services.


Fig. China to account for almost 20% of the world economy2 (% of world GDP in current US dollars)


1 China's contribution to world growth (%), IMF, Goldman Sachs Global Investment Research, May 2019
2 Source: International Monetary Fund: World Economic Outlook (October 2019)

World’s Largest Renewables Investor

China’s transformation to become a high-income economy hinges on its ability to secure a sustainable environment. China is now the world’s largest investor in renewables (See Fig.) with the government taking a strong lead in reshaping China’s financial system and encouraging the private sector to invest in green projects. China’s carbon intensity fell to 0.45 kg of CO2 emitted per unit of GDP in 2018, from 0.71 kg in 20084. The world’s biggest energy consumer is aiming for renewables to account for at least 35 percent of electricity consumption by 20305.


Fig: China is the world’s largest investor in renewable energy6


4 Global Carbon Atlas data, citing data in September 2019.
5 https://www.renewableenergyworld.com/2018/09/26/china-sets-new-renewables-target-of-35-percent-by-2030/
6 McKinsey Global Institute, July 2019. China and the world, Exhibit 11.

Imminent Heavyweight

China is estimated to dominate the MSCI Asia ex Japan Index by 2024, potentially accounting for close to 50% of the index (See Fig.) In particular, as the China A-share market becomes more accessible to offshore investors and with global index providers increasing the weight of China A stocks in their regional and global indices, foreign institutional ownership of China A equities is likely to rise. Likewise, the inclusion of China bonds into global bond indices suggest that China bonds will become an important component of global bond portfolios. The lower correlation of Chinese financial markets with other global markets adds further compulsion for global investors.


Fig. China’s weight in the MSCI Asia ex Japan Index expected to rise3


3 Source: MSCI, FactSet, Goldman Sachs Global Investment Research, May 2019. Please note that the information above is included for illustrative purposes only. It should not be considered a recommendation to purchase or sell such security. Past performance is not necessarily indicative of the future or likely performance. e: estimates; MXCN: MSCI China Index; AC World: MSCI AC World Index; EM: MSCI Emerging Markets Index. Note: Numbers (in 5 years) are estimated based on current market cap.
Estimates assuming full inclusion of China A shares into MSCI indices

Global Technology Leader

China is a global leader in technology, as evident in its world-class consumer internet, mobile payment systems and deployment of artificial intelligence. China’s robotic market is currently the world’s largest, representing 36% of the total units installed globally in 2018. Not resting on its laurels, China continues to invest heavily in technology. It is the world’s second largest research and development (R&D) spender, with USD452 billion invested in 2018 (see Fig). China’s rapid technological innovation will continue to be a key driver of the economy while offering investors significant investment opportunities in related sectors.


Fig. Public Research & Development expenditure, 2018 (USD billions)7


7 The Global Innovation Index 2019, July 2019. Box 1, Figure 1. Authors’ estimates based on data from UNESCO Institute for Statistics (UIS); and EU industrial R&D investment scoreboard 2018.

Urban Transformer

China’s urbanisation rate was 59.2% at the end of 2018, up from 17.9% in 1978 (see Fig). This rapid pace of urbanisation is expected to continue. The Chinese Academy of Social Sciences projects China’s urbanisation rate to rise to 70% by 2035. By that time, one billion Chinese people will be living and working in cities with areas of 100,000 km2, using smart technologies in their day-to-day lives. Such rapid urbanisation will revitalise rural areas, bringing about economic growth, higher living standards and viable industries.


Fig. China’s urban population continues to rise (% of total population)8


8 The World Bank, United Nations Population Division. World Urbanisation Prospectus: 2018 Revision. Data as at 19 February 2020. The 2035 forecast is from National Academy of Economic Strategy under the Chinese Academy of Social Sciences, 17 June 2019.

Super Consumer

The potential of China’s consumer spending is no secret, but the pace of consumption growth continues to astound. McKinsey Global Institute forecasts that by 2030, 58% of Chinese households will be mass affluent consumers9, up from 12% in 2018. This new group of Chinese consumers will not only demand necessities but also quality goods and services. Such additional spending patterns will create a consumer market worth a staggering USD13.9 trillion by 2030 (see Fig.), presenting opportunities for China’s consumer companies that understand local preferences and nuances.


Fig. China’s rapidly growing consumer spending10 (Current USD, trillions)


9 McKinsey Global Institute: China and the world, July 2019. Exhibit 31. Mass affluent consumers are defined as those who earn USD2571 or more per month.
10 Refinitiv Datastream, citing forecast figures from Oxford Economics, data received on 30 December 2019. Current US dollar/Chinese RMB exchange rate of 0.143 is used as at 30 December 2019.

Emerging Healthcare Driver

Healthcare spending accounted for just 5.0% of China’s GDP in 2016 (see Fig). From 2020 to 2035, China’s healthcare expenditure is expected to increase by more than 3-fold to USD2.53 trillion as China’s population ages. By 2035, China’s senior citizen population (aged over 60) is expected to hit 409 million, accounting for 28.5% of the total population11. At the same time, higher living standards will also increase demand for quality drugs and medical services, resulting in significant opportunities for investors in the healthcare and related sectors.


Fig. Annual healthcare expenditure, (% of GDP)12


11 United Nations, Department of Economics and Social Affairs, data obtained on 12 June 2019.
12 The World Bank, data last updated on 19 February 2020. Latest data available.