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On Chinese Stimulus Hopes, 3 ETFs Surging over 10%

Maher Syed

Chinese imports and exports fell in August.  This marks the 10th straight month where imports shrank.  China’s foreign trade dropped by 9.7% in August, with exports falling 6.1% and imports taking a 13.8% dive.  The import slump turned out to be far worse than the 8.2% drop economists expected to see.


Despite the awful news, Chinese stocks ended the day higher.  Earlier in trading, shares were down in Shanghai and Shenzhen by -2.3% and -1.8% respectively.  Shanghai stocks ended the day with shares up 2.9%.  Shenzhen picked up a solid 4% by the time markets closed.


The Chinese announced a new policy today, where trading could become suspended for 30 minutes if stocks rise or fall by 5% as a whole.  If volatility exceeds 7% in either direction, the government will suspend trading for an entire day. 


So why did China’s stock market pick up steam after news that trading woes are more serious than economists foresaw?  Investors are actually gambling on stimulus hopes, betting that the Chinese government will respond to weak trade data with a stimulus.  The main Chinese indexes performed well today, but certain areas within the Chinese market performed even better.  Below, we will highlight 3 ETFs which surged over 10% in trading today.


Deutsche X-trackers Harvest CSI 300 China A-Shares ETF-ASHR


This ETF is supposed to track the CSI 300, which is designed to reflect the performance of the China A-share market.  It is composed of 300 of the largest and most liquid stocks in the China A-share market.  The ETF holds a Zacks Rank #2 (Buy).  In trading today, the ETF surged a massive 10.56%.  It’s worth noting that the ETF is down about 11% year to date.


KraneShares Bosera MSCI China A Share ETF-KBA


KBA is an ETF that attempts to mimic the MSCI China A International index, which is designed to track the performance of large-cap and mid-cap Chinese securities-A shares trading on the Shanghai and Shenzhen markets.  The ETF is a Zacks Rank #2 (Buy).  KBA shot up 10.1% in trading today.  In the last 3 months, KBA has lost about 45% of its value. 


Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap ETF-ASHS


This ETF attempts to replicate the performance of the CSI 500 index, which tracks 500 small cap companies on the Shanghai and Shenzhen stock exchanges.  ASHS is a Zacks Rank #3 (Hold).  ASHS picked up a massive 12.4% in trading today.  Year to date, the ETF has picked up about 5%.


Bottom Line


We know that Chinese stocks as a whole had a good session today.  We also know that a whole is the sum of its parts. 


The bottom line is that if you see the S&P 500, or any other major index having a good day, it’s probable that certain groups of stocks are benefitting more than others.  Thus, it is wise to dig deeper so you can find even more intriguing investment opportunities within the broader market. 


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DEUTS-XT HV CS3 (ASHR): ETF Research Reports
DEUTS-XT HV CS5 (ASHS): ETF Research Reports
KRANS-BOS CHINA (KBA): ETF Research Reports
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