NEW YORK (TheStreet) -- Investors in Chinese stocks may have been disappointed with MSCI's decision this week to delay the inclusion of Chinese A-shares in its indexes. However, Chen Ding, CEO of CSOP Asset Management, said they should not be too distraught, because the sting won't last long.
"We are very, very close to getting China A-shares into MSCI's index framework," said Ding. "We observed that [London's] FTSE already did it last month and I think it won't be way too long."
Mainland Chinese A-shares, which are traded in Shanghai and Shenzhen, are denominated in renminbi, while B-shares are denominated in a foreign currency like U.S. dollars. Louis Lu, CSOP's U.S.-based portfolio manager, said after the decision that there are already a significant number of global investment funds beginning to invest in A-shares via existing channels, and he sees that trend continuing despite MSCI's decision.
CSOP was founded in 2008 as the first offshore asset manager set up by a regulated asset management company in China. CSOP is the largest RMB Qualified Foreign Institutional Investor (RQFII) asset manager globally, with total assets under management of $6.2 billion as of March 2015. Over 80% of CSOP's investments are in passive strategies, with the rest being in actively managed strategies.
In March, the company launched the CSOP FTSE China A50 ETF, which is up 33% in the past three months. The ETF is comprised of A-shares issued by the 50 largest companies in the China A-shares market.
"We think ETFs [are] a very transparent and efficient way to get into China," said Ding.
Even after the recent run-up in Chinese shares, both Ding and Lu believe that large caps in China are still attractively valued.
"The top 50 A-shares stocks [are] trading at 14x PE where S&P 500 is trading at 18x PE, based on trailing 12-month figures," said Lu in a statement. "Over time, we expect broader participation from international investors as markets move away from momentum investing and toward fundamentals-based investing, creating opportunities across a range of sectors and market capitalizations."
"China's GDP is currently about 12% of the global GDP, and foreign investors only count for 2% of the stock markets. So foreign investors, you are far, far underweight in China," said Ding.