ETF Trends
ETF Trends

China exchange traded funds are rallying as the country kicks off the Lunar New Year holiday on Monday. Investors are hoping the Year of the Dragon will prove profitable for Chinese stocks.

The $6.5 billion iShares FTSE China 25 Index Fund (NYSEArca: FXI) recently broke above its 200-day moving average. The ETF has languished below this level since the summer but has delivered an impressive rally the past month on hopes China is successfully engineering a soft landing for the economy.

Last week, China said GDP rose 8.9% in the fourth quarter. Economic growth slowed from the year-earlier period but was stronger than forecast. [China ETFs Attempting Breakout on Economic Data]

“News that China reported 8.9% GDP growth in the fourth quarter was greeted with mixed emotions last week. Some expressed concern that this was the nation’s weakest expansion in two years. Others noted that while China’s market is showing signs of a slowdown, this estimate-beating report is helping to dispel hard-landing fears,” writes Don Dion at The Street on Monday.

However, he cautioned the FXI and other China-related ETFs could be volatile this week as the country’s market will be closed for the holiday. U.S.-listed ETFs can trade while their underlying markets are closed.

Other ETFs tracking Chinese stocks include SPDR S&P China ETF (GXC) and PowerShares Golden Dragon Halter USX China Portfolio (PGJ).

China is expecting a 5% rise in the number of babies born in 2012, according to reports.

“The dragon, considered the most auspicious Zodiac sign in Chinese culture, is often associated with good fortune and intelligence and is believed to be the sign of those destined for success,” Time.com reports. “Dragon years typically generate more births than other years in the Zodiac cycle, including in 2000 when Hong Kong saw a more than 5% increase in births.”

iShares FTSE China 25 Index Fund


The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. 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.