ETF Trends
ETF Trends

Exchange traded funds holdings China A-shares, the stocks trading on mainland exchanges in Shanghai and Shenzhen, are Tuesday’s top performers after index provider FTSE Russell said it will transition A-shares into global benchmarks.

Today, the top six ETFs by percentage gains and seven of the top 10 are A-shares, led by the newly minted Direxion 2x Daily CSI 300 China A Share ETF (NYSEArca: CHAU), the first leveraged A-shares ETF to list in the U.S. CHAU, which is up 7.7% at this writing, is seeks to deliver double the daily performance of the CSI 300 Index.

The CSI 300 Index serves as the underlying benchmark for the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), the largest U.S-listed A-shares ETF, and the Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK), the oldest A-shares ETF trading in the U.S. [Upping the Ante With China ETFs]

FTSE Russell said China A-shares will account for about 5% of the FTSE Emerging Markets Index, the underlying benchmark for the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO), the largest emerging markets ETF by assets.

The initial weighting of China A Shares in the FTSE Emerging inclusion indexes will be approximately 5%. This is expected to increase to 32% (at 31-March 2015 market values) when China A Shares are fully available to international investors, and hence resulting in Chinese stocks (including B-Share, H-Share, P Chips and Red Chips) to make up 50% of FTSE Emerging Index,” said FTSE Russell in a statement.

VWO had a weight to China of 28.6% at the end of last month, according to Vanguard data.

ASHR is up 3.8% today on volume that has already exceeded the daily average while PEK is higher by 4.2% on volume that is already approaching double the daily average. The KraneShares Bosera MSCI China A ETF (NYSEArca: KBA), which tracks an MSCI index, is higher by 4.5% on volume that is more than 40% above the 90-day trailing average. [Index Changes Could Boost China ETFs]

MSCI is expected to make an announcement regarding the inclusion of A-shares in its global benchmarks on June 9. FTSE is creating two transition indexes to ease the move of A-shares into traditional benchmarks.

“The two new Emerging Markets indexes include China A Shares at a weighting equivalent to total R/QFII allocations. The A Share weighting will increase as total R/QFII allocations increase and the China A Shares inclusion indexes will merge seamlessly with the standard FTSE Emerging Markets indexes when China A Shares fully meet FTSE’s country classification criteria for emerging markets,” according to the FTSE Russell statement.

FTSE is the dominant provider of A-shares indexes with over 70% A-shares ETFs listed in Hong Kong tracking the a FTSE benchmark.

The CSOP FTSE China A50 ETF (NYSEArca: AFTY), the first ETF to be listed independently in the U.S. by a Chinese asset management company, debuted in March and tracks FTSE China A50 Index. AFTY is up nearly 3% and earlier hit an all-time high. [Another Good Year for new ETFs]

FTSE Russell is also the index provider for the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China-related ETF that tracks Chinese companies listed on the Hong Kong stock exchange.

CSOP FTSE China A50 ETF