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China Downgraded by JP Morgan After ETF Falls 12%


The iShares FTSE China 25 (FXI) is down 12% from its 2013 high even as the Dow Jones Industrial Average sets new records, illustrating the divergence between emerging and developed markets do far this year.

Now, JP Morgan (JPM) has downgraded China to underweight and recommended bearish bets against the country’s largest banks.

“Growth momentum is now slowing with policy response constrained; a nasty combination,” Adrian Mowat, JP Morgan’s chief Asia and emerging-market strategist, wrote in a note Monday, Bloomberg News reports.

FXI, the Chinese ETF, has dropped below its 200-day exponential moving average. [S&P 500 Record, Dow Streak Overshadow China ETF Decline]

Earlier this month, the government unveiled new measures designed to cool property prices. [China ETFs Tumble on Home-Price Curbs]

Guggenheim China Real Estate (TAO) is off about 13% from its 52-week high recorded in January.

“Investors are concerned about the possibility of slowing growth and monetary tightening,” Wu Kan, a fund manager at Dazhong Insurance Co., told Bloomberg.

iShares China FTSE China 25


The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.