China ETFs Are Attracting Investor Interest
This article was originally published on ETFTrends.com.
China exchange traded funds have been attracting greater interest, with some value investors now looking at the growing emerging market as a cheaper play, especially after government officials assuaged market concerns.
The world’s largest ETFs tracking Chinese stocks are attracting more inflows than at any time since the boom-and-bust in 2015 as state investors were said to be stemming the market bleeding, Bloomberg reports.
Specifically, the Shanghai-listed China 50 ETF experienced $1.19 billion in inflows this October while the Shanghai Composite Index suffered through one of its worst months since January 2016. Other mainland-listed large-cap funds including China CSI 500 ETF and the Hong Kong-listed CSOP FTSE China A50 ETF have also attracted heavy inflows.
Meanwhile, among U.S.-listed China ETFs, the iShares China Large-Cap ETF (FXI) attracted $230.8 million in new inflows, iShares MSCI China ETF (MCHI) added $291.3 million and Xtrackers CSI 300 China A-Shares ETF (ASHR) saw $125.8 million in inflows over the past month, according to XTF data.
China’s national team of state funds has supported stocks over the past week by buying into large-cap stocks on Friday and Monday, according to people familiar with the matter. Beijing announced a number of measures to help prop up its ailing equity market and bolster confidence after the emerging market slipped into a bear market.
The government has exhibited a long history of stepping into provide equities a helping hand through its national team during periods of extreme volatility or during political risk-off events.
“The national team might be switching gear to passive investment,” Dai Ming, a fund manager with Hengsheng Asset Management Co., told Bloomberg. Active investment creates “market noise and systemic risks as some investors bet the national team will always be there to prop up stocks. Stabilization funds invested through passive funds will not only smooth out market volatility but also save them from the moral risk.”
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