The iShares FTSE China 25 Index Fund (NYSEArca: FXI) followed global stocks lower Friday on the Eurozone debt crisis with a decline of more than 2%, but the nearly $7 billion exchange traded fund has bounced about 30% from its October low.
China ETFs have perked up over the last month on speculation the country will avoid a hard landing in the economy. The recent interest-rate cut from the European Central Bank has also helped.
“The rate cut and recent progress on the Greek debt problem help local investors psychologically by increasing their appetite for risk assets,” Zhang Ling, general manager at Shanghai River Fund Management Co., said in a Bloomberg report. “Domestically, the period for policy over-tightening is over and that’ll help the economy get on a smooth track and is positive for stocks.” [China ETF Jumps 13% in a Week]
Inflation is still a factor within China’s economy, however, it has decreased, from 6.5% in July to 6.1% in September, reports Gary Gordon for The Street. Policymakers may loosen bank reserve requirements or lower interest rates sometime in the near future. [China ETFs Wrestle with Rate Hikes, Inflation]