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China ETFs to Gain on New Stimuli to Combat Coronavirus

Sweta Jaiswal, FRM

The world’s second-largest economy is struggling to minimize the impact of coronavirus on human resources as well as the economic front. China’s central bank injected 1.7 trillion yuan or $242.74 billion via reverse repos on Feb 3 and Feb 4 in order to instill confidence in investors.

Meanwhile, the coronavirus eruption is showing no signs of dying down. The outbreak has already claimed around 490 lives in China along with around 24,324 confirmed cases. The outbreak is being compared with severe acute respiratory syndrome or SARS epidemic that wreaked havoc during 2002-2003. In fact, the death toll in China due to the coronavirus outbreak has surpassed the SARS fatality count of 349 (read: Best & Worst ETFs of Coronavirus-Affected January).

The introduction of fresh stimuli has helped China’s stocks to recover from the lowest level in more than four years. It is worth noting here that China has expanded to become an integral part of the global supply chain. Therefore, any slowdown in China will have an impact on the global financial markets.

Notably, major U.S. indices scaled new highs on Feb 4. The timing of the move by China’s government is important. It has come at a time when analysts expect the outbreak to slow China’s economic growth to 5% or below. It is even expected to hurt China’s ability to meet its commitments as pledged under the phase-one trade deal with the United States. Per investment bank Goldman Sachs, coronavirus will affect China’s economic growth by 0.4% in 2020. It also anticipates first-quarter 2020 economic growth in the United States to face a 0.4% impact (read: 5 ETFs to Protect Your Portfolio From Coronavirus Threat).

ETFs in Focus

Against this backdrop, investors can keep a tab on a few China ETFs like iShares China Large-Cap ETF FXI, iShares MSCI China ETF MCHI, Xtrackers Harvest CSI 300 China A-Shares ETF ASHR and Invesco Golden Dragon China ETF PGJ.

FXI

This fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the FTSE China 50 Index. It comprises 50 holdings. The fund’s AUM is $4.47 billion and expense ratio is 0.74% (read: Can China ETFs Survive the Coronavirus Onslaught?).

MCHI

This fund tracks the MSCI China Index. It comprises 595 holdings. The fund’s AUM is $4.68 billion and expense ratio is 0.59% (read: 10 ETFs for 2020).

ASHR

This fund tracks the CSI 300 Index. It comprises 302 holdings. The fund’s AUM is $2.20 billion and expense ratio is 0.65% (read: ETFs to Gain on China's Upbeat Exports Data for December).

PGJ

This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. It holds a basket of 66 stocks. The product has AUM of $196.6 million and charges 70 bps in annual fees.

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Invesco Golden Dragon China ETF (PGJ): ETF Research Reports
 
iShares China Large-Cap ETF (FXI): ETF Research Reports
 
Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR): ETF Research Reports
 
iShares MSCI China ETF (MCHI): ETF Research Reports
 
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