China’s manufacturing activity grew faster than expected in June 2017. According to China’s National Bureau of Statistics (NBS), the manufacturing Purchasing Managers Index (PMI) increased to 51.7 in June compared with 51.2 in May and above market estimates of 51, per a Reuters poll.
Moreover, China’s services PMI increased to 54.9 in June compared with 54.5 in May. Improvement in both these measures is indicative of resilience in the economy and the momentum provides some respite considering the looming debt problem faced by the country. Investors should note that PMI readings higher than 50 indicate expansion while below 50 indicate contraction (read: IMF Raises China Growth Outlook: ETFs in Focus).
Per Bloomberg, new export orders increased to 52, highest in more than five years. The Chinese economy grew 6.9% year over year in the first quarter of 2017 compared with 6.8% in the fourth quarter of 2016.
Recently, MSCI announced its plans of including China’s mainland shares to its benchmark emerging markets index. This prompted a rally in Chinese stocks.
Despite these positives, investors are concerned about the Chinese economy because of the massive debt problem. The debt burden woes prompted Moody’s to downgrade China’s debt rating to A1 from Aa3. Moreover, China’s Consumer confidence decreased to 112 in May 2017 compared with 113.4 in April (read: Moody's Cuts China's Credit Rating: ETFs in Focus).
Let us now discuss a few ETFs focused on providing exposure to the Chinese economy.
iShares China Large-Cap ETF (FXI - Free Report)
This fund seeks to provide exposure to Chinese equities, serving as a pure play on the economy.
It has AUM of $3.18 billion and is a relatively expensive bet as it charges a fee of 74 basis points a year. From a sector look, Financials, Energy and Information Technology are the top three allocations of the fund, with 51.38%, 11.63 % and 10.79% exposure, respectively (as of June 28, 2017). From an individual holding perspective, Tencent Holdings Ltd, China Construction Bank Corp and China Mobile Ltd are the top three allocations of the fund, with 9.21%, 8.47% and 7.64% exposure, respectively (as of June 29, 2017). The fund has returned 14.65% year to date and 17.72% in the last one year (as of June 29, 2017). FXI currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares MSCI China ETF (MCHI - Free Report)
This ETF is another such option to play the BRIC nation.
It has AUM of $2.45 billion and charges a fee of 64 basis points a year. From a sector look, Information Technology, Financials and Consumer Discretionary are the top three allocations of the fund, with 36.23%, 23.92% and 10.48% exposure, respectively (as of June 13, 2017). From an individual holding perspective, Tencent Holdings Ltd, Alibaba Group Holding ADR and China Construction Bank Corp are the top three allocations of the fund, with 15.16%, 11.79% and 5.27% exposure, respectively (as of June 13, 2017). The fund has returned 25.25% year to date and 29.51% in the last one year (as of June 29, 2017). MCHI currently has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P China ETF (GXC - Free Report)
This fund has AUM of $890.09 million and charges a fee of 59 basis points a year. From a sector look, Information Technology, Financials and Consumer Discretionary are the top three allocations of the fund, with 31.41%, 23.26% and 11.81% exposure, respectively (as of June 13, 2017). From an individual holding perspective, Tencent Holdings Ltd, Alibaba Group Holding ADR and China Construction Bank Corporation are the top three allocations of the fund, with 12.27%, 9.72%, and 5.07% exposure, respectively (as of June 13, 2017). The fund has returned 24.02% year to date and 28.95% in the last one year (as of June 29, 2017). GXC currently has a Zacks ETF Rank #3 with a Medium risk outlook.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
China’s manufacturing activity grew faster than expected in June 2017. According to China’s National Bureau of Statistics (NBS), the manufacturing Purchasing Managers Index (PMI) increased to 51.7 in June compared with 51.2 in May and above market estimates of 51, per a Reuters poll.
Moreover, China’s services PMI increased to 54.9 in June compared with 54.5 in May. Improvement in both these measures is indicative of resilience in the economy and the momentum provides some respite considering the looming debt problem faced by the country. Investors should note that PMI readings higher than 50 indicate expansion while below 50 indicate contraction (read: IMF Raises China Growth Outlook: ETFs in Focus).
Per Bloomberg, new export orders increased to 52, highest in more than five years. The Chinese economy grew 6.9% year over year in the first quarter of 2017 compared with 6.8% in the fourth quarter of 2016.
Recently, MSCI announced its plans of including China’s mainland shares to its benchmark emerging markets index. This prompted a rally in Chinese stocks.
Despite these positives, investors are concerned about the Chinese economy because of the massive debt problem. The debt burden woes prompted Moody’s to downgrade China’s debt rating to A1 from Aa3. Moreover, China’s Consumer confidence decreased to 112 in May 2017 compared with 113.4 in April (read: Moody's Cuts China's Credit Rating: ETFs in Focus).
Let us now discuss a few ETFs focused on providing exposure to the Chinese economy.
iShares China Large-Cap ETF (FXI - Free Report)
This fund seeks to provide exposure to Chinese equities, serving as a pure play on the economy.
It has AUM of $3.18 billion and is a relatively expensive bet as it charges a fee of 74 basis points a year. From a sector look, Financials, Energy and Information Technology are the top three allocations of the fund, with 51.38%, 11.63 % and 10.79% exposure, respectively (as of June 28, 2017). From an individual holding perspective, Tencent Holdings Ltd, China Construction Bank Corp and China Mobile Ltd are the top three allocations of the fund, with 9.21%, 8.47% and 7.64% exposure, respectively (as of June 29, 2017). The fund has returned 14.65% year to date and 17.72% in the last one year (as of June 29, 2017). FXI currently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
iShares MSCI China ETF (MCHI - Free Report)
This ETF is another such option to play the BRIC nation.
It has AUM of $2.45 billion and charges a fee of 64 basis points a year. From a sector look, Information Technology, Financials and Consumer Discretionary are the top three allocations of the fund, with 36.23%, 23.92% and 10.48% exposure, respectively (as of June 13, 2017). From an individual holding perspective, Tencent Holdings Ltd, Alibaba Group Holding ADR and China Construction Bank Corp are the top three allocations of the fund, with 15.16%, 11.79% and 5.27% exposure, respectively (as of June 13, 2017). The fund has returned 25.25% year to date and 29.51% in the last one year (as of June 29, 2017). MCHI currently has a Zacks ETF Rank #3 with a Medium risk outlook.
SPDR S&P China ETF (GXC - Free Report)
This fund has AUM of $890.09 million and charges a fee of 59 basis points a year. From a sector look, Information Technology, Financials and Consumer Discretionary are the top three allocations of the fund, with 31.41%, 23.26% and 11.81% exposure, respectively (as of June 13, 2017). From an individual holding perspective, Tencent Holdings Ltd, Alibaba Group Holding ADR and China Construction Bank Corporation are the top three allocations of the fund, with 12.27%, 9.72%, and 5.07% exposure, respectively (as of June 13, 2017). The fund has returned 24.02% year to date and 28.95% in the last one year (as of June 29, 2017). GXC currently has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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