The FTSE China A50 Index, also known as China A50 or China50, serves as a benchmark for investors seeking access to the China domestic market through A Shares – securities issued by mainland Chinese companies and traded by Chinese and institutional investors by the Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor regulations. It is a tradable index updated in real-time. It consists of the top 50 A Share firms’ total market capitalization of the securities listed on the Shanghai and Shenzhen stock exchanges, respectively.
China50 is available on the eToro investment platform. Trading on this index be overwhelming especially if you are a novice user so be sure that you completely read this article to get all of the critical information that you need.
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History of China A50
China A shares are now included in many global equity indexes. This process began recently, but FTSE Russell has offered China A shares indexes since 2001. Restrictions on index investment have been loosened for a while now and it appears that the inclusion process is going well so far.
The FTSE CHINA A50 was among the first indexes to be started in 2003. Considering the significant transformations in China's economy since, one might be forgiven for considering it risky. The good news is that there are have been major advancements in terms of how much investment is accessible. China, the second largest economy in the world, has rapidly grown over the last 2 decades. Despite changes to its shareholding system, it still offers investors interesting opportunities.
The FTSE China A50 Index is a free-float adjusted, liquidity-screened index that measures the performance of the Chinese economy. Each quarter, in March, June, September, and December, the index is re-evaluated to verify that it continues to be reflective of China's underlying market. In China's A-Share market, the index strikes the ideal mix of representativeness and trading liquidity. It can be used to support exchange-traded and over-the-counter (OTC) derivatives, as well as mutual funds and exchange-traded funds (ETFs).
Factors to Consider When Trading China A50
The FTSE China A50 serves as a benchmark for investors seeking access to the China domestic market via A Shares. A critical factor to monitor is the success of China's financial industry since financial services stocks comprise a sizable portion of the index.
Despite a flexible exchange rate regime, China's central bank exerts decisive control over the value of the Chinese currency, the Yuan, concerning other foreign currencies. The index strikes the best blend of representativeness and trading liquidity in China's A-Share market. It can serve as the basis for exchange-traded and over-the-counter derivative products, mutual funds, and exchange-traded funds.
These are the economic events affecting China's A50:
- The People's Bank of China's monetary policy
- The performance of the Chinese stock market
- Corporate tax rate
- GDP growth
- The figure for retail sales
- Rate of inflation
- Trade balance
- Manufacturing purchasing managers' index
How to Trade China A50?
China A50 trading tracks 50 major companies listed on the Shanghai and Shenzhen stock exchanges. Trading in China A50 can be buying contracts for differences (CFDs) that track the performance of the underlying index. If traders are long on an index using eToro, traders make a profit when the value of the index grows and lose money if its value falls. The opposite applies if traders are going to be short on the index.
With trading in China A50 with long-term plans in place and record-keeping, entrepreneurs can easily assume that China's role in the global technology market will become more significant. To give exposure to investors, they can manage the investment strategy focused on Chinese technology companies and the global technology companies that generate a large proportion of their revenues in China.
Trading China A50 via ETFs
Trading FTSE China A50 to access china's A-list companies can be done through ETF. With ETF, it provides investment results that are similarly relative to FTSE China A50 Index. As ETF heavily relies on this index, the share prices tend to fluctuate throughout the trading day, making the risk of losing the principal, least possible.
Trading China A50 via Futures
Trading the China A50 index and accessing A-listed stocks can be done through futures. With futures, traders can diversify by accessing a broad range of investments, protecting profit by minimizing a chance of loss, and utilizing liquidity.
Trading China A50 via CFDs
Trading in China's A50 index through contracts of difference poses many benefits, including leveraging from the trend and movements in the market of China. Traders can utilize CFDs as a way of speculating on the China A50 due to its flexibility. It will also allow traders over the globe to access A-listed stocks that make up the China A50 index. Traders and investors can increase their profits from price movement by using CFDs, even when the CDF investor does not own the underlying commodity.
Trading China A50 CFDs with eToro
The FTSE China A50 comprises firms listed on the Shanghai and Shenzhen Stock Exchanges in China. The Bank of China, CITIC, Securities, and China Railway Rolling Stock Corporation are among the significant Chinese firms. The British FTSE Group manages the FTSE China A50 index. At the beginning of 2021, the FTSE China A50 continued to rise steadily along with other China stocks.
To trade the FTSE China A50 on eToro, a first-time trader should be aware of several essential details since some differences between the Chinese market and typical western markets may be ignored even by experienced investors. A significant difference is that China has a lower degree of transparency than other countries. Despite some of the concerns raised thus far, there are numerous opportunities to discover in this index.
How to Trade China A50 in eToro?
- Create an account on eToro or log-in your account for existing users.
- Click "Discover".
- Select "Indices".
- Look for "China50".
- Select BUY or SELL.
- Key in your desired amount to invest or the number of China50 units you want to trade.
- Review and set the stop loss, leverage, and take profit parameters.
- Select "Open Trade".
Is It Wise to Invest in China A50?
China A50 constituents are highly tradeable because the index has been the foundation for many popular financial instruments. With significant open interest and liquidity, FTSE China A50 Index futures are the only offshore China A Share futures contracts available to international traders. Moreover, some listed ETFs track the FTSE China A50 Index, which remains very relevant to investors despite the transition in China's economy and equities markets since its creation, due to its history of relatively robust liquidity.
Its track record has also contributed to the index's popularity. The index is made up of large corporations. The method has attracted increasing flows to China A50 constituents as China A-shares inclusion events have become more popular among global index providers. The Industrials and Materials sectors are underrepresented in the FTSE China A50 Index, with only 5% of the companies in the index being export-driven. The FTSE China A50 is expected to be more volatile than the broader China A-Shares index due to its relatively high concentration of constituents.
Ready to trade China A50 with eToro?
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Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
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