ETF Investors Surprising Reaction To China’s Rally
After the precipitous plunge in Chinese equities, exchange traded fund investors remain wary of China, largely ignoring a rally that has pushed Chinese markets back into bull territory.
The iShares China Large-Cap ETF (FXI) , the largest China-related ETF that tracks Chinese companies listed on the Hong Kong stock exchange, has jumped 20.2% since the August 24 low. Similarly, other China H-shares ETFs options including the SPDR S&P China ETF (GXC) and the iShares MSCI China ETF (MCHI) have increased 24.4% and 22.5%. A bull market is defined by a rise of 20% from a recent low.
Meanwhile, since August 24, FXI saw $138 million in net outflows, GXC lost $89.8 million and MCHI saw $37 million in redemptions, according to ETF.com.
Additionally, looking at China A-shares ETFs that track mainland Chinese stocks traded in Shanghai and Shenzhen, the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (ASHR) surged 29.0%, KraneShares Bosera MSCI China A ETF (KBA) rose 18.4% and Market Vectors ChinaAMC A-Share ETF (PEK) advanced 32.4% since August 24.
Over the course of the rally, ASHR only saw $59.9 million in net inflows, KBA experienced $2.2 million in outflows and PEK added $4 million.
The Shanghai Composite Index officially entered a bull market Thursday, gaining 20.3% since the late-summer nadir, reports Chao Deng for the Wall Street Journal.
China’s smaller Shenzhen Composite Index and a gauge of China’s volatile start up shares have jumped 32% and 43%, respectively.
The greater gains in the Shenzhen may help explain the outperformance in China A-shares compared to H-shares as the China A-shares ETF benchmarks are comprised of both shares listed on the Shanghai and Shenzhen indices.
The Chinese equities are rallying after Beijing intervened in the financial market to stem exodus. The government tried to stabilize domestic markets by pumping money into state-backed funds that bought blue-chip stocks, clamping down on short sellers and suspending initial public offerings.
Additionally, mainland stocks strengthened last month in anticipation that officials would expand easing measures after the government revealed growth slowed to 6.9% in the third quarter, below its target of around 7%.
iShares China Large-Cap ETF
For more information on China, visit our China category.
Max Chen contributed to this article.
