Will Higher Rates Hit China Real Estate ETF?

April 17th at 10:49am by Tom Lydon

China has been looking at ways to cool its real estate market, and the recent crackdown on speculation in the country’s capital could put pressure on the China real estate exchange traded fund (ETF).

Also, China on Sunday again boosted the requirement on reserves banks must hold, for the fourth time this year.

Guggenheim China Real Estate ETF (NYSEArca: TAO) tries to reflect the performance of the equity index AlphaShares China Real Estate Index, which monitors the performance of publicly issued common equity securities of publicly-traded companies and real estate investment trusts (REITs) that may be invested by foreigners. The fund has an expense ratio of 0.65%. The ETF weights Hong Kong at 72.84% and China at 27.16%. 

In Beijing, prices on new homes plummeted 26.7% month-over-month in March, and average prices on newly constructed houses for March dropped 10.9% year-over-year, according to iMarketNews. [China ETFs Rise Along with Inflation.]

In contrast, property prices increased 0.4% month-over-month in February, 0.8% in January and 0.2% in December.

An unidentified official from the city’s Housing and Urban-Rural Development Commission commented that home purchases plunged 50.9% year-over-year and 41.5% month-over-month as the government places greater scrutiny over speculation in the real estate market. The central government has implemented several measures since last year to cool the housing market.

Guggenheim China Real Estate ETF was up 12.7% for the year ended April 14, but is in the red over the past three months, according to Morningstar.

Guggenheim China Real Estate ETF

For more information on China ETFs, visit our China category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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