CSOP FTSE China A50 ETF (AFTY)
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Chinese government has generally had some idea of how much risk Evergrande and other highly leveraged real estate companies pose since last year. Equity holders will most likely be wiped out, with holders of bond and wealth management products taking significant haircuts.
The impact of the policy remedy to China's property market excesses is spreading across global markets. But they would bounce hard on any evidence of a mitigation plan from Beijing.
Shares in China continue to post sharp year-to-date losses vs. an otherwise upside bias for global stocks, based on a set of exchange-traded funds tracking the world's major equity regions through yesterday's close (Aug. 25). Some investors see opportunity in beaten-down shares, but there's still a wide-ranging debate as the market prices in higher uncertainty driven by the vagaries of Beijing's evolving policy agenda.
The crash was triggered by new regulations in the booming private education industry. Beyond private education, investors fear that large swaths of high-growth sectors that were market darlings in recent years could be vulnerable to government action.
Flows into China-focused ETFs are surging as investors position for China's growing economic and financial strength. Non-Chinese investors are generally overlooking China's growing influence on the global economy and in capital markets.
China currently represents just 5% of the MSCI All Country World Index (ACWI) while the US represents 58%. Since the beginning of 2020, the MSCI China A Index has outperformed the CSI 300 Index by 561 basis points, as shown in Figure 2.
As the ETF industry has matured, so too has the competition.
China country-specific ETFs were the hardest-hit areas of the market Monday as investors assessed the extent of the coronavirus outbreak and worried about the potential negative effect it will have on the economy.
Foreign investors have several ways to tap into China's booming economy via exchange-traded funds.
Global stock markets are on track to record their best first-half performance in more than 20 years. We highlight four top-performing country ETFs that are up more than 30%.