The Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK), the oldest U.S.-listed A-shares ETF, is soaring by 5.4% on heavy volume and is trading at its highest levels in nearly three and a half years. Although the A-shares ETFs do not feature the excessive financial services sector exposure found in the iShares China Large-Cap ETF (NYSEArca: FXI), the trio is still levered to investor sentiment to China’s largest financial services firms. The average weight to the financial services sector across ASHR, KBA and PEK is 38.7%. [A Rush to A-Shares ETFs]
“Trading values in the Shanghai Composite rose to a record 401.6 billion yuan ($65.3 billion) last week, boosting the profit outlook of brokerages relying on trading commissions as the main source of their revenue,” according to Azous.
That could be a sign that the much ballyhooed Shanghai-Hong Kong Stock Connect, which launched on Nov. 17, is having the desired impact of driving fresh capital to China’s onshore markets. The Stock Connect program is also part of China’s efforts to further liberalize its sprawling financial markets to foreign investors.
It is also seen as the driving force behind an influx of capital to A-shares ETFs. Last month, PEK added nearly $7 million in new assets, including its best single day of inflows since March. Investors added over $159 million to ASHR, creating such robust demand for the A-shares ETF that Deutsche Asset & Wealth Management was forced to limit creations in that ETF for the second time in 70 days. [Bumpy Ride for A-Shares ETFs]
Deutsche X-trackers Harvest CSI 300 China A-Shares ETF
