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Will China ETFs Gain on Better-Than-Expected Trade Data?

The world’s second-largest economy has cheered investors with encouraging trade data. China’s export and import numbers did witness a year-over-year decline in March but successfully beat analyst estimates. According to data from the General Administration of Customs, China’s exports declined 6.6% year over year in March, while imports slid 0.9% in the same month. The figures displayed smaller-than-expected contraction, as against expectations of a year-over-year decline of 14% in exports in March and a 9.5% fall in imports (per a Reuters’ poll). China’s March trade surplus came in at $19.9 billion, in comparison to analysts’ expectations of $18.55 billion.

Li Kuiwen, spokesperson for the General Administration of Customs, has said that the U.S.-China phase one trade deal is gradually being implied. Moreover, backed by the encouraging trade data, China’s Shanghai Composite index rose 1.59% on Apr 14, along with a 1.93% rise in the blue-chip CSI300 index on the same day.

Another data set released recently shows that China is gradually recovering from the coronavirus outbreak. China’s official Purchasing Manager Index (PMI) for March managed to surpass expectations despite its economy being hit by the pandemic. The PMI for March came in at 52, beating analysts’ expectations of 45 (per a Reuters’ poll). The metric compares favorably with the record low level of 35.7 seen in February. Notably, PMI readings above 50 indicate expansion. China’s official non-manufacturing PMI came in at 52.3 in March comparing favorably with 29.6 in February (read: Is it the Right Time to Buy China ETFs? Let's Explore).

China is, nevertheless, still exposed to risks of the second wave of new coronavirus infections and drop in global economic growth. The slowing global economic growth might result in declining export numbers in China. Also, analysts estimate a contraction in its economy in the first quarter of 2020. Deutsche Bank sees the global economy falling into a coronavirus-led recession in the first half of 2020.

Meanwhile, China’s central bank has been taking adequate measures. It injected 100 billion yuan ($14 billion) via the one-year medium-term lending facility, trimming the rate to 2.95% from 3.15%. The banks’ reserve ratio has also been reduced by 50 basis points (bps). The move is expected to inject about 200 billion yuan of liquidity into the financial system.

ETFs in Focus

Against this backdrop, investors can keep a tab on a few China ETFs like iShares MSCI China ETF MCHIiShares China Large-Cap ETF FXIXtrackers Harvest CSI 300 China A-Shares ETF ASHR, SPDR S&P China ETF GXC, iShares MSCI China A ETF CNYA and Invesco Golden Dragon China ETF PGJ.

MCHI

This fund tracks the MSCI China Index. It comprises 603 holdings. The fund’s AUM is $5.30 billion and the expense ratio is 0.59% (read: Should You Buy China ETFs as Coronavirus Cases Wane?).

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 $4.16 billion and the expense ratio, 0.74% (read: Will China ETFs Gain on New Round of Monetary Easing?).

ASHR

This fund tracks the CSI 300 Index. It comprises 302 holdings. The fund’s AUM is $1.66 billion and the expense ratio is 0.65%.

GXC

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P China BMI Index. It comprises 733 holdings. The fund’s AUM is $1.24 billion and the expense ratio, 0.59%.

CNYA

The fund tracks the MSCI China A Inclusion Index. It comprises 467 holdings. The fund’s AUM is $325.7 million and the expense ratio is 0.60% (read: What Coronavirus? These China ETFs Gained Past Month).

PGJ

This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies headquartered or incorporated in the People’s Republic of China. It holds a basket of 65 stocks. The product has an AUM of $157.2 million and charges 70 bps in annual fees.

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iShares MSCI China ETF (MCHI): ETF Research Reports
 
iShares China Large-Cap ETF (FXI): ETF Research Reports
 
SPDR S&P China ETF (GXC): ETF Research Reports
 
Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR): ETF Research Reports
 
Invesco Golden Dragon China ETF (PGJ): ETF Research Reports
 
iShares MSCI China A ETF (CNYA): ETF Research Reports
 
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Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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