Xtrackers CSI 300 China A Hdg Eq ETF (ASHX)
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China's property sector is not a growth driver of the Chinese economy, but a growth passenger. China's fiscal system also created incentives for local governments to favor housing market development.
China has not solved the unravelling crisis in its development/construction sector. The nation has moved through all the ‘natural' stages an economy goes through when implementing the free market capitalism model.
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.
Whether an ETF investor is looking for a short-term play or a buy-and-hold fund, ETFs with momentum can be an investor's best friend. Here are three ETFs from provider DWS that are seeing strong momentum now, which could carry them through the remainder of 2021.
A bullish sentiment could be fueling a stronger demand for Chinese equities in 2021. ETF provider DWS offers several funds to satiate appetites for high-quality A-shares and broader equity exposure in China.