The fund generally will invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. The index designed to measure the performance of the largest companies in the Chinese equity market that trade on the Stock Exchange of Hong Kong and are available to international investors. The fund is non-diversified.
Global equity ETFs have seen a steady drumbeat of inflows all year long, but one major player has been left out of the party. China has climbed a great wall of worry for years – with a property debt crisis, a disastrous equity slump, and a slow exit from COVID-19 restrictions.
According to JPMorgan, retail interest in so-called zero-day-to-expiration options rose, with selling of the Nasdaq 100 QQQ and S&P 500 SPY exchange-traded funds seeing the largest weekly sales since the beginning of the year.
Sunil Koul, Asia Pacific equity strategist at Goldman Sachs, discusses the outlook for Chinese stocks, which are trading higher as the market reopened after a holiday break. Koul speaks on "Bloomberg: The China Show.
Chinese stocks have endured a debilitating 15-year bear market. However, several bullish data points suggest that now is the time to be long-term bullish.
China's economy grew 5.3% in the first quarter of 2024, outpacing expectations. Despite the optimistic growth forecasts, contrarian economic data cast shadows over the long-term outlook.
Chinese stocks are at a 20-year low and trading at 10x PE, indicating a lack of investor confidence. The ETF consensus EPS growth of 12% is in line with the S&P 500 while the Chinese economy growth a twice the US. FXI suffers from weak diversification with large weight in the struggling Banking sector.