China stocks have been witnessing relentless selling pressure on concerns about the country’s ties with Russia and regulatory pressure. The Hang Seng China Enterprises Index declined 7.2% to start the week, the biggest drop since November 2008 while the Shanghai Composite fell 2.6%. The Shenzhen Component dropped roughly 3.1%.

The Hang Sang Tech Index tumbled 11% in its worst decline since the gauge was launched in July 2020, wiping out $2.1 trillion in value since its year-earlier peak. The sharp plunge has evoked memories of the 2018 meltdown. The terrible trading in the stock world also sent China ETFs space into deep red on the day (read: Is It Time to Invest In East Over West? ETFs in Focus).

Invesco Golden Dragon China ETF (PGJ Quick QuotePGJ - Free Report) took the worst hit, tumbling 11.8%. This was followed by declines of 11.7% for KraneShares CSI China Internet ETF (KWEB Quick QuoteKWEB - Free Report) , 10.2% for Global X MSCI China Consumer Discretionary ETF (CHIQ Quick QuoteCHIQ - Free Report) , 9% for KraneShares MSCI China Clean Technology Index ETF (KGRN Quick QuoteKGRN - Free Report) and 8.5% for KraneShares Hang Seng TECH Index ETF (KTEC Quick QuoteKTEC - Free Report) .

More on the Plunge

The massive decline came after reports, which showed that Russia had asked China for military assistance in its fight against Ukraine. Even though China denied the report, investors fear that Beijing’s potential proposal toward Vladimir Putin could bring a global backlash or sanctions against Chinese firms. China is said to consider buying or increasing stakes in Russian energy and commodities companies, moves that could raise tensions with the United States.

Meanwhile, the fresh U.S. regulatory crackdown added to the weakness in the stock market. Last week, the U.S. Securities and Exchange Commission revealed five companies that could be subject to delisting for failure to comply with auditing requirements.

Additionally, soaring commodity prices have sparked concerns over inflation and limited the Chinese central bank’s ability to ease policy. Further, China is currently undergoing the worst wave of COVID-19 infections since its outbreak in 2020 leading to a lockdown. This has clouded the outlook for Chinese companies’ earnings and economic growth. Given the combination of headwinds, China targets slower economic growth of around 5.5% this year (read: Will China ETFs Feel the Pressure of Weak Economic Data?).

Below we profile the above-mentioned ETFs in detail and discuss some of the specifics behind their recent slump:

Invesco Golden Dragon China ETF follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. It holds a basket of 95 stocks with a concentration on the top two firms. Consumer discretionary and communication services sectors take the largest share at 46.7% and 29.6%, respectively.

Invesco Golden Dragon China ETF has AUM of $154.2 million and charges 69 bps in annual fees. It trades in an average daily volume of 121,000 shares and has a Zacks ETF Rank #5 (Strong Sell).

KraneShares CSI China Internet ETF provides concentrated exposure to China-based companies whose primary business or businesses are focused on Internet and Internet-related technology. KraneShares CSI China Internet ETF tracks the CSI China Overseas Internet Index and holds 56 securities in its basket with a higher concentration on the top firms.

KraneShares CSI China Internet ETF has amassed $4.9 billion in its asset base and charges 70 bps in annual fees from investors. KWEB trades in an average daily volume of 16.4 million shares and currently has a Zacks ETF Rank #5 with a High-risk outlook.

Global X MSCI China Consumer Discretionary ETF offers exposure to the consumer discretionary sector in China by tracking the MSCI China Consumer Discretionary 10/50 Index. Holding 76 securities in its basket, it is moderately concentrated on the top three firms.

Global X MSCI China Consumer Discretionary ETF has AUM of $281.1 million and charges 65 bps in annual fees. It trades in an average daily volume of 184,000 shares has a Zacks ETF Rank #5 with a Medium risk outlook (read: After a Painful 2021, Is It Time to Buy China ETFs?).

KraneShares MSCI China Clean Technology Index ETF follows the MSCI China IMI Environment 10/40 Index, which provides exposure to Chinese companies that focus on clean technology and contribute to a more environmentally sustainable economy. The index comprises securities that derive at least 50% of their revenues from environmentally beneficial products and services. KraneShares MSCI China Clean Technology Index ETF holds a well-diversified portfolio of 58 stocks and charges 78 bps in annual fees.

KraneShares MSCI China Clean Technology Index ETF has accumulated $142.8 million and trades in an average daily volume of 36,000 shares.

KraneShares Hang Seng TECH Index ETF offers exposure to the 30 largest companies in Hong Kong's rapidly growing technology sector. It tracks the Hang Seng TECH Index, which measures the performance of innovative companies with strong research & development investment, high revenue growth, and themes such as cloud, e-commerce, fintech and Internet.

KraneShares Hang Seng TECH Index ETF charges 69 bps in annual fees and has accumulated $4.5 million shares in its asset base. It trades in an average daily volume of 6,000 shares.