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MARKET COMMENT
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There are a number of ways that investors can get exposure to the Chinese market. For example, simply by investing in companies such as Vodafone (LSE: VOD) and HSBC (LSE: HSBA), you are getting some exposure to the Chinese market. This is because both firms have vested interests in Chinese companies. In effect, investing in a FTSE 100 index tracker also gives you an indirect investment in China. Others companies which are exposed to China include GlaxoSmithKline (LSE: GSK) and ICI (LSE: ICI) - both outfits have dedicated distribution centres in the country. Meanwhile, Imperial Tobacco (LSE: IMT) has a ten-year deal with Yuxi-Hongta in which the Chinese company will distrbute West in China, where smokers are estimated to puff their way through 1.7 trillion cigarettes annually! In my view, investing in companies that have an exposure to China is already quite a good way to buy into the growing Chinese economy. However, investors who prefer to have greater control over their Chinese investments can soon do so through a new iShare, which is an Exchange Traded Fund (ETF). The iShare FTSE/Xinhua China 25 will begin trading on the London Stock Exchange on 25 October. ETFs are low-cost index funds that can easily be bought and sold like ordinary shares, which makes them ideal for long-term investors. They can also be included in Share ISAs or Self-Invested Personal Pensions, which will protect any investment gains from tax. Interestingly, active investors have also been known to use ETFs too, in order to take advantage of market movements! The iShares FTSE/Xinhua China 25 will be the first ETF to be available in Europe with exposure to the Chinese economy. These iShares, which carry a modest administration charge of 0.74%, will track the performance of two out of four categories of Chinese shares traded. These are red chips and H shares, both of which are listed on the Hong Kong Stock Exchange. In my view, buying foreign shares can be a sensible option for investors who want to diversify their investment portfolios. Furthermore, investing in fast-growing economies, such as China, could also boost your investment returns. However, investors need to understand that currency fluctuations can sometimes wipe out (or magnify) any share-price gains! More: How To Invest In China | How To Buy Foreign Shares | We Need More Trackers David owns shares in GlaxoSmithKline and Vodafone.