Financial services and energy names combine for nearly 65% of FXI’s weight. Alone, financial services commands an allocation of 52.2% in the ETF. Underscoring the vulnerability of Chinese large-caps in this glum run for the country’s stocks is this factoid courtesy of Bloomberg: No Chinese companies are found among the world’s 10 largest for the first time since 2006.
If there is a silver lining for Chinese stocks and shareholders of ETFs such as FXI it is the market’s discounts relative to the broader emerging markets universe.
“When you view Chinese stocks from the value perspective, they look cheap relative to other emerging markets and the broader market. For instance, the MSCI China index is currently trading at below 9x forward earnings, versus 10.6x for the MSCI EM index and nearly 15x for MSCI World index,” said iShares Global Chief Investment Strategist Russ Koesterich. [Why Chinese Stocks are a Value Play]
iShares China Large Cap ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM and Google.