Opinion | For global investors, now is precisely the wrong time to overlook China’s market potential

Asia’s largest producer of giant windmills. The creator of Africa’s favourite cellphones. And the world’s most valuable artificial intelligence start-up.

These are just some examples of the kind of firms that have popped up in China in recent years – the product of a gradual but epochal economic rebalancing that has seen low-tech, heavy-duty manufacturing increasingly superseded by hi-tech innovation and domestic consumption.

This story has been largely beyond foreign investors, whose holdings account for less than 2 per cent of China’s stock and bond markets. But this is starting to change, and in a big way.

The opening up of the mainland’s capital markets has sped up markedly in recent years, most prominently with a pair of “stock connects” linking bourses in Shanghai and Shenzhen with the international finance hub in Hong Kong.

The China Interbank Bond Market Direct scheme was introduced in 2016, followed by a “bond connect” with Hong Kong last July. And a new stock connect could link the mainland with London as soon as the end of this year.

Another major milestone comes on June 1, when index provider MSCI includes more than 200 big-cap mainland-listed stocks – also known as A shares – in its  Emerging Markets Index.