The rally in China exchange traded funds is, finally, starting to receive more attention and deservedly so after five China ETFs hit new 52-week highs on Monday.
None of the China ETFs making new highs Monday were A-shares funds, but that does not mean the stocks traded in Shanghai and Shenzhen are lagging. The Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK) was Monday’s top-performing non-leveraged ETF with a gain of 3.7% on volume that was better than six times the daily average.
The db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), the largest A-shares ETF, gained almost 3%, also on volume that was better than six times the daily average. TheKraneShares Bosera MSCI China ETF (NYSEArca: KBA) got in on the fun as well with a 2.6% pop. Those performance cement the notion that China ETFs and stocks on the mainland and Hong Kong are trying to break some critical multi-year resistance. [China ETFs are Perking Up]
“Last week, we highlighted how China’s A-share market was on the verge of a technical break out. Since then, the Shanghai index (SHCOMP) has staged that break-out,” said Robbert van Batenburg, director of market strategy at Newedge Group, in a statement released Monday.
Amid talk of declining property values, which have served to cool bubble speculation, and steadying economic growth, ASHR and KBA have surged 9% and 8.2%, respectively, since the start of this month. A-shares ETFs are also benefiting as more global investors realize the Chinese banking system may be stronger than it is given credit for.
“Chinese banks are highly regulated from the People’s Bank of China (PBOC). Additionally in order to expand beyond China, the Chinese banks need to raise their transparency, risk controls and adhere to international banking standards,” according to a recent note from KraneShares.