Stoked by strong manufacturing data, China-related exchange traded funds have surged over the past week as investors’ fear of a potential “hard landing” are allayed.
On Monday, the preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of manufacturing activity, rose to 51.1 in October from 49.9 at the end of September, according to a WSJ report.
“All these data confirm our view that there is no risk of a hard landing in China,” HSBC Chief Economist for China Hongbin Qu said in the WSJ report.
The largest ETF tracking China, iShares FTSE China 25 Index Fund (NYSEArca: FXI) gained nearly 13% on the week.
The rally in the Chinese equities, along with the broader emerging markets, has also been mirrored by rebounding commodities prices. [Russian ETFs Glide Higher with Oil, Commodities]
“As China takes its foot off the brake in the near future, we should see a recovery in demand from the world’s largest consumer of commodities, as markets there are pretty tight,” BlackRock‘s investment chief for natural resources Evy Hambro said, Reuters reports.
Market observers and investors will be watching China closely as the country is a leading indicator for global economy. ETF investors may want to keep an eye on Chinese funds, like FXI, to get a sense of China’s direction. [S&P 500 ETFs’ Rally Over 200-Day Average Opens Door to Year-End Rally]
iShares FTSE China 25 Index Fund
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Max Chen contributed to this article.