ETFs
China-focused ETFs have become ‘political footballs’ in the US as investor apprehension drives widespread shutdown – iShares China Large-Cap ETF (ARCA:FXI), KraneShares Bosera MSCI China A 50 Connect Index ETF (ARCA:KBA)
A professional trader for 20 years reveals his “MoneyLine”
Ditch your indicators and use the “MoneyLine”. A simple line tells you when to buy and sell without any guesswork. It’s a line on a chart that helped Nic Chahine win 83% of his options purchases. Here’s how he does it.
The year 2024 would have seen a record number of U.S.-listed, China-focused exchange-traded funds (ETFs) close, marking an all-time high since these funds’ inception. The trend reflects growing investor concerns about the world’s second-largest economy.
What happened: According to data from Morningstar Direct, 13 US-listed Chinese ETFs ceased trading in the first quarter of 2024 alone, according to the Financial Times reported Monday.
This increase in closures far exceeds the previous annual record of five closures in 2020 and 2023. Despite the global popularity of ETFs, which have seen 58 consecutive months of net inflows, leading to a record $12.7 trillion in assets As of late March, ETFs focused on environmental, social, and governance (ESG) factors, are also experiencing record closings in the U.S. and around the world.
Bryan Armordirector of passive strategies research for North America at Morningstar, links these closures to political pressure, saying China and ESG-focused ETFs have become “political footballs.”
See also: Stocks jump following a good earnings season and a rise in jobless claims: this week on the markets
Additionally, the rate of new ETF launches has decreased significantly. Only 33 China ETFs were introduced in the first quarter of 2024, a drastic drop from the 160 launched in 2023 and the record 291 during the 2021 peak. Likewise, the 18 ESG launches in the first quarter are a sharp slowdown from Last year. 151 and 2021 peak of 313, according to Morningstar data.
Despite these closures, global ETF assets have increased. ESG ETFs around the world now hold a record $542 billion in assets, driven by growing demand in Europe. Similarly, China-focused ETFs now hold $364 billion, up from $320 billion at the start of the year.
Why is this important: Earlier this year, Chinese stocks saw a significant rebound, with the SSE composite index reaching its highest level since September, indicating a potential economic recovery. This is largely explained by the country’s economic recovery following the bursting of a housing bubble.
Additionally, key ETFs such as KraneShares CSI China Internet ETF (NYSE:KWEB), KraneShares Bosera MSCI China A 50 Connect Index ETF (NYSE:KBA), iShares MSCI China ETF (NYSE:MCHI), And iShares China Large Cap ETF (NYSE:FXI) outperformed major US equity ETFssignaling a potential shift in the market landscape.
Despite the closures, the growth potential of China’s internet and technology sectors remains promising, as stated by Henry Greene, Investment Strategist at KraneShares, in an exclusive interview with Benzinga. This speaks to the complex dynamics at play in the Chinese market.
Image via Shutterstock
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A professional trader for 20 years reveals his “MoneyLine”
Ditch your indicators and use the “MoneyLine”. A simple line tells you when to buy and sell without any guesswork. It’s a line on a chart that helped Nic Chahine win 83% of his options purchases. Here’s how he does it.
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