Hey guys, I found a nice website tracking the World stock market cap:
According to it, the current market cap of the World is
USA accounts for $35 trillion, so 41%, much less than 55% in VT.
Interestingly, China&India have a market cap of $15.5 trillion, 18% of the World. Much more than the typical share of the whole EM in an All-World ETF.
Kind of sad that we cannot really invest in the whole World.
The FTSE Global All Cap index (base for VT) has a market cap of $53 trillion and 7900 companies
compared to the mentioned $85 trillion of actual World market cap and 52’000 companies!
Just think about it:
in VT, you invest 55% in USA and 4% in China&India, easily a 10:1 ratio
where actually it’s 41% and 18%, closer to a 2:1!
Awesome stuff. I guess this brings us back to the topic - how can we invest more in China without overweighting the few main public stocks:
I’m looking into rebuilding my portfolio,I wanted to keep it simple, buy
VT and that was it. but… I noticed China is not represented in that ETF.
Digging deeper I started looking into “emerging markets’ ETFs” and surprisingly China is almost nowere.
China is the second largest economy in the world (US 1st, Japan 3rd) how is that possible?
I used to have UBS (Lux) Equity Fund - Greater China but it had a TER of 2.4% (that’s cazy I know ) but it performed very well.
PS. Just for reference, we already had a thread about this:
Global. So BOTH.
I made a cheat sheet here, I guess it’s also gonna be useful in the wiki. Blue are European ETFs, green are American.
I’m really worried about my memory. I don’t remember what I did just a few months ago…
I can’t give a general answer, but I can tell you what I plan to do.
I’m watching this MSCI China-A ETF
and plan to start purchasing when the trend shows sings of reversal
you mean you want to buy when its cheaper than today. what if it’s never?
Edit: I checked the actual chart and see the trend is bearish. So you mean you wait until it starts going up again? Did you check how big is the market cap of the index?
Why this fund? How is it different from my Chinese stocks in VT?
This ETF are A shares and I think VT has B shares.
Yes I actually expect it to fall more and expect it to reverse at the same time as other Chinese ETFs and emerging markets in general. There is a chance that it could already be at its low point as it now matched the Feb 2016 lows and bounced.
China-A shares are traded on the domestic market. They are the most volatile.
But then why Lyxor and not for example this (cheaper) one:
Explore KBA for FREE on ETFdb.com: Price, Holdings, Charts, Technicals, Fact Sheet, News, and more.
Or this one:
Explore CNYA for FREE on ETFdb.com: Price, Holdings, Charts, Technicals, Fact Sheet, News, and more.
They cost roughly the same actually (TER 0.6 - 0.65%).
Lyxor because it’s listed on SIX and I’m still with CT.
CSI 300 index (Top 300 A-Shares) another 2% lower which brings it again closer to multiyear lows in price as well as historical lows in P/E and P/B ratios.
the P/B was at it’s lowest in May 2014 at 9.59
According to Bloomberg now at 11.21
I found the factsheet of the index:
It’s interesting. This CSI looks like it’s a Chinese equivalent of FTSE or MSCI.
Another interesting part is when I check the market cap. It says:
constituents total market cap: 27’300 CNY Bn (4’000 USD Bn)
index market cap: 10’500 CNY Bn (1’500 USD Bn)
What’s the difference here? My guess is it’s about the “non-negotiable” shares (shares that you cannot trade).
Btw I also found:
CSI 800: that’s CSI 300 + CSI 500, large, mid and small cap ($5 trillion market / $2 trillion index)
CSI China A: all 3000 stocks ($7 trillion market / $3 trillion index)
But sadly no ETFs for these.
MSCI China A and CSI 300 mostly overlap (the MSCI has 400 constituents) so this is indeed not a very good representation of the entire A-shares landscape.
I also found no CSI 800 ETF, but a quick search returned the:
Xtrackers Harvest CSI 500 (AMEX:ASHS)
Found one that has it all:
It still makes me wonder, the one you found follows MSCI All China, which has a market cap of $3tn. The total market cap of Shanghai, Shenzhen and Hong Kong however is $11tn. Where are the missing $8tn? I don’t think they are all non-negotiable.
The CSI Free float has 3546 Constituents
still considerably more than CSI 800, but I don’t think there’s as much as $8tn left out. I don’t think entire Hong Kong counts towards Chinese shares either.
It’s a bit like MSCI Poland, it’s basically the WIG20 ($60bn), widely ignoring hundreds of companies of the broad WIG ($160bn).
I wonder how these discrepancies affect actual country weights in All-World indices…
There are no “weights” for countries! They just take the company by its market cap. If they can’t get a certain company, they just don’t take it into the index. They don’t compensate some companies missing in country X by adding more companies of that country.
Oh but there are, indirectly.
If 100% of US Market Capitalization qualifies for the VT, but only 10% of Chinese does, then you get an incorrect ratio of 10:1 which you’ve only just complained about. The imperfection lies in the underlying index and a narrow choice of stocks from some countries, while others are broadly represented.
There’s also Vanguard Total China ETF:
45% are A shares.
TER is 0.40%.
Number of holdings 904 (1,123 in benchmark) -> 45% * 904 = ~406 A-shares holdings
Median market cap 216.0 B (220.2 B in benchmark).