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The rising tide of investment is good news for Chinese markets but the risk for these fund managers is that they may be over-estimating investor appetite for the overvalued and opaque Chinese stock markets. The head start by hedge funds and active money managers could elevate valuations for passive investors.

China’s CSI300 index trades at 20.9 times current earnings, among the highest such valuation in Asia.

UBS Securities estimates passive and active foreign investment flows into China from MSCI’s inclusion will be about $14 billion, less than MSCI’s own projections of $17-18 billion in initial flows. These estimates are roughly based on the $1.6 trillion that tracks the emerging markets index.

Although the inflows will be around just a quarter of China’s daily trading turnover, foreign ownership in Chinese shares will rise steadily from 4-5 percent, said UBS analyst Gao Ting.

Chinese asset managers are also smelling business opportunities.

Shanghai-based MegaTrust Investments is launching its first offshore fund to help foreign investors buy A-shares guided by local expertise.

Charlie Chen, chief investment officer at MegaTrust, reckons generating sustainably strong returns in A-shares against the benchmark index will be challenging and his new fund should help global investors do that.

Shenzhen-based Academia Capital Management is also riding on the MSCI wave with plans to launch an offshore fund that seeks absolute returns using quantitative strategies.

Passive investors are already increasing their exposure to A-shares using China-focused exchange-traded funds (ETFs).

KraneShares Bosera MSCI China A ETF, a New York-listed, China-dedicated ETF, has seen its assets under management explode more than 10-fold this year to roughly 1.3 billion yuan, partly driven by bets from U.S. investors that Chinese shares would gain MSCI inclusion.

“Compared with other emerging markets, A-shares have always been under-owned by U.S. investors. Once their interest is lit up, there’s a big room for A-share allocation to increase,” said Wan Qiong, fund manager at Bosera.

“I’m optimistic that foreign capital will continue to flow in steadily in the second half.”