Industry legend Anthony Bolton referred to the developments as "the most significant reform package in China for about 30 years", and believes the market could significantly rally as a result.
Here FE Trustnet looks at ways investors can get access to the China recovery story, with a selection of different investment vehicles.
Invesco Perpetual Hong Kong & China
While by no means the largest or highest profile, the Invesco Perpetual Hong Kong & China fund has been the standout performer in its IMA China/Greater China sector in the last decade.
The £217m fund is a top-quartile performer over one, three, five and 10 years, as well as over one, three and six months.
Its numbers look particularly good over three years: our data shows the fund has returned more than 18 per cent over this time, while the IMA China/Greater China sector has managed just 0.38 per cent.
Source: FE Analytics
In the last five years, the fund has been consistently less volatile than its sector and also has a lower max drawdown. It has managed to outperform in both rising and falling markets over the period.
Invesco Perpetual Hong Kong & China was hit by the departure of lead manager Samantha Ho in the summer of last year, but replacements Mike Shiao and Lorraine Kuo have picked up the baton successfully, leading the fund to top-decile returns in the last 18 months or so.
The fund gets access to the region via the mainland, as well as companies listed in Hong Kong and Taiwan, which derive the majority of their profits from China. Mainland China has a 40 per cent weighting, Hong Kong 50 per cent, with the remainder in Taiwan.
Shiao and Kuo are currently positive on the recovery taking place in China, believing that the slowdown in growth and structural reforms should make the economy more sustainable in the long-run.
They remain watchful of downside risks, however, targeting companies with a low level of gearing and strong balance sheets.
Consumer discretionary goods and financials are the managers’ biggest sector bets. Auto-parts company Minth is the fund’s biggest single stock position by some distance, at 7.7 per cent.
Invesco Perpetual Hong Kong & China requires a minimum investment of £500 and has ongoing charges of 1.7 per cent. It is available across most major platforms.
Fidelity China Special Situations IT
Investment trusts often offer an attractive way to get access to a cheap market, as often those that specialise in the region are on a heavy discount to net asset value (NAV). Improving market conditions tend to lead these discounts to narrow, which gives investors a "double whammy" effect on the upside.
Anthony Bolton’s Fidelity China Special Situations IT was on a premium for much of 2010 and 2011, but poor relative returns combined with a difficult period for Chinese equities in general has pushed the trust on to a 7.9 per cent discount at the time of writing. This puts its well ahead of its one- and three-year average of 5.9 and 2.7 per cent, respectively.
Bolton’s contrarian style and a bias towards small and mid caps contributed to the trust’s underperformance, but it could perform strongly if sentiment towards China continues to improve.
Indeed, the trust has significantly outperformed its MSCI China benchmark in the past six months or so, meaning that it’s now only a fraction behind the index since launch.
Performance of trust and index since launch
Source: FE Analytics
Bolton is focused predominantly on the consumerisation of China, targeting the companies that he believes will benefit from this trend. Internet media companies such as Tencent and Alibaba are among his biggest holdings.
The trust will be taken over by Dale Nicholls when Bolton retires in April next year. Nicholls has amassed a strong track record as manager of the FF Pacific fund, which has beaten its MSCI AC Pacific benchmark over one, three and five years.
Fidelity China Special Situations IT has ongoing charges of 1.78 per cent, excluding performance fee.
The trust is just over 20 per cent geared, which reflects Bolton’s bullish view on the markets at the moment.
Nicholls confirmed that he is likely to maintain this level of gearing when he takes over.
Aberdeen Global Chinese Equity
Aberdeen and First State are seen as the go-to groups in the emerging markets space, though with First State Greater China Growth now closed to new money, only the Aberdeen Global Chinese Equity fund remains an option for everyday investors.
Like the vast majority of Aberdeen’s vehicles, this $3.4bn fund is team-managed, significantly lowering key manager risk.
It is run with the same attention to downside risk and volatility as the likes of Aberdeen Emerging Markets, which has led it to significant outperformance during market downturns, but softer periods during big upswings.
This could make it a good option for the more cautious proponents of China, who still acknowledge there are key risks in the country.
FE data shows Aberdeen Global Chinese Equity has outperformed its MSCI Zhong Huang benchmark and IMA China/Greater China sector over a five-year period, with returns of 120.63 per cent.
As the risk/return graph below illustrates, the team has done this with less volatility than both.
Risk/return of fund, sector and index over 5yrs
Source: FE Analytics
The fund focuses on quality companies with sustainable cash flows and strong balance sheets. It is invested predominantly in large caps, with China Mobile, Jardine Strategic, HSBC and Petrochina in its top-10.
The five crown-rated vehicle requires a minimum investment of $1,500 and has ongoing charges of 1.96 per cent. It is domiciled in Luxembourg.
Schroder Asian Alpha Plus
Investors who are only quietly confident about the China recovery may prefer an Asia Pacific fund that has a meaningful position in the region, with the flexibility to scale back exposure if necessary.
One such example is Matthew Dobbs’ £528m Schroder Asian Alpha Plus portfolio, which has more than 50 per cent of its assets in Hong Kong, China and Taiwan. Internet search engine provider Baidu and property company Sun Hung Kai Properties are both top-10 holdings, for example.
Dobbs has led the fund to top-decile performance since its launch in November 2007, with returns of 67.18 per cent. It is also ahead of both its sector and benchmark over a three-year period, but it is slightly behind over one.
Performance of fund, sector and index since launch
Source: FE Analytics
It has been marginally more volatile than its sector and the MSCI AC Far East ex Japan index since its launch, which is relatively typical of a fund looking to add a high level of alpha to its benchmark over the medium- to long-term.
Schroder Asian Alpha Plus is rated highly by Rob Gleeson and his FE Research team, who include it in their FE Select 100.
The five crown-rated fund requires a minimum investment of £1,000 and has ongoing charges of 1.7 per cent.
iShares MSCI China index
Cost-conscious investors may be interested in getting access to China via a cheap passive vehicle, such as the iShares MSCI China Index ETF.
There are various versions of the ETF, listed in Luxembourg, the US and Hong Kong. It typically has ongoing charges of 0.6 per cent.
The ETF has fallen almost 50 percentage points short of the MSCI China index since its launch in 2001, though it has managed to outperform the majority of actively managed China funds with a long enough track record.
Performance of ETF and index since launch
Source: FE Analytics
The ETF has 138 holdings, though is dominated by the top-20 or so mega caps. China Mobile, China Construction Bank and internet company Tencent are the three biggest positions, making up more than 20 per cent of assets.
Fidelity’s Anthony Bolton recently warned against getting access to China via a tracker, saying poor corporate governance in the region makes selective stockpicking absolutely crucial.