U.S. Markets closed

China A-Shares ETFs Bounce on Beijing’s Support

etftrends@etftrends.com (ETF Trends)

Despite the global weakness, Chinese A-shares market and country-specific exchange traded funds (ETFs) rallied Tuesday on speculation Beijing would back the equities market.

The Market Vectors ChinaAMC SME-ChiNext ETF (CNXT) and Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (ASHS) led gains Tuesday, rising 2.3% and 2.4%, respectively. The China A-shares ETFs track more middle capitalization-weighted companies. Nevertheless, CNXT is still down 20.1% and ASHS is 19.3% lower year-to-date.

Meanwhile, the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) , the largest China A-shares-related ETF, rose 0.9%. ASHR declined 14.4% year-to-date.

Market observers argued that Chinese traders were encouraged by President Xi Jinping’s after-market hours call to maintain a “healthy development of the stock market,” reports Dominique Fong for MarketWatch.

Xi chaired a Communist Party Politburo meeting of Chinese leaders who urged “strengthening market supervision and protecting investor interests,” according to a state official media.

The comments drew investors’ attention as top leaders rarely show public support of the equities market.

Trending on ETF Trends

Best 15 ETFs for Utilities Sector Exposure

Morgan Stanley Upgrade Bounces Greece ETFs

A Biotech ETF Proving Immune to Hawkish Fed Policy Changes

Retail ETFs: Be Careful Shopping With Amazon, Home Depot, Wal-Mart

Finding Pharmaceuticals ETFs With Rebound Potential

“The politburo meeting has led investors in the mainland to speculate that the government will probably come up with more measures to prop up stocks, so they are buying though corporate earnings are not very impressive,” Wei Wei, an analyst at Huaxi Securities, told Bloomberg.

China National Radio said Beijing will increase supervision of the stock market to protect investors and will maintain a prudent monetary policy, along with a proactive fiscal policy.

China’s first quarter earnings were not as bad as previously feared and many see signs of a stabilizing economy. Combined quarterly profits of 2,837 mainland-listed companies only fell 0.45% while 666 companies projected earnings increases or a turn to profit over the first half, Reuters reports.

Click here to read more ETF news, strategy and commentary on ETF Trends. Market Vectors ChinaAMC SME-ChiNext ETF

CNXT_ETF