ETFs tracking China have rebounded the past few weeks after a nasty sell-off on fears the world’s second-largest economy was facing a full-blown credit crisis.
The iShares China Large-Cap (NYSEArca: FXI) is still down about 15% year to date with emerging market ETFs trailing the S&P 500 by a wide margin. [China ETFs Weak on Credit Fears, Economy]
“So is it still a good time to jump into China equities following its really bad month of June? A trend may be building that supports that take, at least based on the 10%+ improvement over the last few weeks that can be seen in a number of key China equity-based ETFs,” Daniel Sckolnik, senior analyst at Sabrient Systems, said in a note this week.
Despite the recent bounce, it’s been a tough year for FXI and other China ETFs on hard-landing worries. China’s GDP growth slowed to 7.5% in the second quarter.
“No doubt the 15% drop in the China’s Shanghai Composite Index during the month of June has frightened off a number of investors seeking entry, or perhaps re-entry, into the emerging markets arena, one within which China is still considered to be classified,” Sckolnik said.