Furthermore, China is attempting to formalize private lending which would disburse capital back into the local markets in a controlled and regulated style. Financial reform is a hot topic in China, and once the underground lending and black market financial deals ease, markets should be able to make a lasting recovery. [China Data Strengthens – Time to Get Back into ETFs?]
ETFs such as the iShares MSCI Hong Kong Index (NYSEArca: EWH) can help mitigate any risk that lies ahead for Chinese markets. The ETF focuses on banks, utilities and property companies. The market-cap weighted approach to the fund allows for higher allocations to established large-cap companies. The largest China-focused fund, iShares FTSE China 25 Index (NYSEArca: FXI) outperformed the S&P 500 Index by 0.5% in the month of November.
Everyone is negative on Chinese stocks and the bears are exhausted, says noted technical analyst Tom DeMark. “And now is the perfect environment to make a low and be positive as the last seller, figuratively speaking, has sold,” he told Bloomberg.
iShares FTSE China 25 Index
Tisha Guerrero contributed to this article.