Chinese equities have led the recovery since the March downturn, with performance supported by net flows into ETFs (along with other funds).
This performance has been driven by the consumer staples, consumer discretionary, technology and healthcare sectors, which benefitted from the lockdown environment and subsequent market rebound.
Technology, in particular, has grown quickly and now competes with the US' long-held position as that market's leader
The outperformance of these sectors, relative to traditional investment-led sectors (industrials, utilities, financials and energy) reflect the broader transition underway in China towards a consumer-led economy.
Corporate earnings have also proved to be resilient - Chinese equities are the only market to have delivered positive 2020 earnings growth expectations year-to-date, while the Shenzhen market in particular has seen growth expectations revised upwards.
Corporate earnings growth is now expected to exceed 2019 levels by more than 17% by the end of 2021, a marked contrast to Europe and the US, which appear unlikely to reach pre-Covid-19 levels.
Yet, despite these strong characteristics, Chinese equities are currently trading at modest valuations relative to other regions and, indeed, their own history. Prior to the Covid-19 outbreak, Chinese equity valuations were lower than global were lower than global peers, which can be attributed to at least in part due to a combination of trade tensions with the US and lingering concerns regarding the pace of economic growth.
Yet while, last most markets, Chinese valuations have returned to pre-Covid-19 levels, they are not overtly rich in comparison with other markets.
The challenge for investors is, of course, gaining exposure to the Chinese economy which, despite being the second largest in the world (accounting for 16% of global GDP), is vastly underrepresented in global equity indices - just 5% of the MSCI ACWI index as of 30 June 2020.
This is largely due to the unique nature of China's capital market structure, with most of the 'onshore' equity market largely closed to foreign investors and, as a result, two-thirds of Chinese equity value not available for trading.
This said, there are many ways to access Chinese equities, with numerous indices that each retain their own features.
The distinctions between 'onshore' and 'offshore' listings can be complex but are still salient to expected to performance, though this can be expected to fade eventually if China continues to open its market over the coming years.
Chanchal Samadder is head of ETF product strategy at Lyxor ETF
• Consumer staples, consumer discretionary, technology and healthcare have led the recovery, reflecting China's move to a consumer-led economy
• Valuations are currently trading at modest valuations, despite positive earnings growth
• Chinese equities remain sizeably underrepresented in global equity indices
• Two-thirds of Chinese equity value is currently not available for trading by foreign investors