We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
China May Ease Monetary Policy After 14 Years: ETFs in Focus
Read MoreHide Full Article
China’s top leadership has adjusted its monetary policy stance for the first time since 2011, signaling a significant shift in response to mounting economic pressures and potential geopolitical tensions, per Bloomberg, as quoted on NDTV Profit.
The Politburo, the Communist Party’s 24-member governing body led by President Xi Jinping, announced it will now adopt a “moderately loose” monetary policy — a term China last used in 2010 when it looked to support a recovery from the global financial crisis.
Notably, China's growth has stalled as a collapse in the property market has weighed on consumer confidence and consumption. Despite repeated measures by the People’s Bank of China, such as cutting interest rates and reducing bank reserve requirements, authorities have struggled to spur substantial borrowing or economic momentum.
This policy shift reflects urgency to bolster growth after the anticipated post-pandemic recovery fell short of expectations. The decisions made during this December meeting will guide discussions at the upcoming Central Economic Work Conference, where the country’s 2025 growth targets will be set.
Inside China’s GDP Growth
The Chinese economy expanded 4.6% year over year in Q3 of 2024, compared with market forecasts of 4.5% and a 4.7% rise in Q2. It marked the slowest annual growth rate since Q1 of 2023, due to insistent property weakness, wobbly domestic demand, deflation risks, and trade war with the West.
Trade concerns remained a wall of worry. Exports rose the least in five months while imports were sluggish. In the first three quarters of 2024, the economy grew 4.8%, falling short of China’s full-year target of around 5%.
Proactive Fiscal Policy and Stimulus Measures
In addition to the monetary policy shift, the Politburo pledged a “more proactive” fiscal strategy, an evolution from its previous commitment to a merely “proactive” fiscal policy. The decision comes as China signals efforts to increase borrowing and fiscal deficits in 2025, as noted by an official Xinhua News Agency commentary.
Should You Buy the China ETFs?
In September, we noticed some improving signs: industrial output and retail sales both saw their largest increases in four months, and the urban jobless rate dropped to a three-month low of 5.1%. Now, these cues of more monetary easing should pave the way for China exchange-traded fund (ETF) investing.
Below, we highlight a few China ETFs that could gain on compelling valuation, recent winning momentum and news of monetary policy easing. These ETFs have considerable price-to-earnings (P/E) ratios, indicating cheaper valuation.
First Trust China AlphaDEX Fund (FCA - Free Report) – Up 2.7% Past Week; P/E: 4.75X
iShares China Large-Cap ETF (FXI - Free Report) – Up 1.5%; P/E: 10.62X
Franklin FTSE China ETF (FLCH - Free Report) – Up 1.2%; P/E: 10.87X
iShares MSCI China ETF (MCHI - Free Report) – Up 1.0%; P/E: 10.89X
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
China May Ease Monetary Policy After 14 Years: ETFs in Focus
China’s top leadership has adjusted its monetary policy stance for the first time since 2011, signaling a significant shift in response to mounting economic pressures and potential geopolitical tensions, per Bloomberg, as quoted on NDTV Profit.
The Politburo, the Communist Party’s 24-member governing body led by President Xi Jinping, announced it will now adopt a “moderately loose” monetary policy — a term China last used in 2010 when it looked to support a recovery from the global financial crisis.
Notably, China's growth has stalled as a collapse in the property market has weighed on consumer confidence and consumption. Despite repeated measures by the People’s Bank of China, such as cutting interest rates and reducing bank reserve requirements, authorities have struggled to spur substantial borrowing or economic momentum.
This policy shift reflects urgency to bolster growth after the anticipated post-pandemic recovery fell short of expectations. The decisions made during this December meeting will guide discussions at the upcoming Central Economic Work Conference, where the country’s 2025 growth targets will be set.
Inside China’s GDP Growth
The Chinese economy expanded 4.6% year over year in Q3 of 2024, compared with market forecasts of 4.5% and a 4.7% rise in Q2. It marked the slowest annual growth rate since Q1 of 2023, due to insistent property weakness, wobbly domestic demand, deflation risks, and trade war with the West.
Trade concerns remained a wall of worry. Exports rose the least in five months while imports were sluggish. In the first three quarters of 2024, the economy grew 4.8%, falling short of China’s full-year target of around 5%.
Proactive Fiscal Policy and Stimulus Measures
In addition to the monetary policy shift, the Politburo pledged a “more proactive” fiscal strategy, an evolution from its previous commitment to a merely “proactive” fiscal policy. The decision comes as China signals efforts to increase borrowing and fiscal deficits in 2025, as noted by an official Xinhua News Agency commentary.
Should You Buy the China ETFs?
In September, we noticed some improving signs: industrial output and retail sales both saw their largest increases in four months, and the urban jobless rate dropped to a three-month low of 5.1%. Now, these cues of more monetary easing should pave the way for China exchange-traded fund (ETF) investing.
Below, we highlight a few China ETFs that could gain on compelling valuation, recent winning momentum and news of monetary policy easing. These ETFs have considerable price-to-earnings (P/E) ratios, indicating cheaper valuation.
First Trust China AlphaDEX Fund (FCA - Free Report) – Up 2.7% Past Week; P/E: 4.75X
iShares China Large-Cap ETF (FXI - Free Report) – Up 1.5%; P/E: 10.62X
Franklin FTSE China ETF (FLCH - Free Report) – Up 1.2%; P/E: 10.87X
iShares MSCI China ETF (MCHI - Free Report) – Up 1.0%; P/E: 10.89X