The equities markets and exchange traded funds ended the month of April on a sour note after broad U.S. benchmarks peaked new heights in the prior week.
Over April, the Dow Jones Industrial Average rose 0.4%, the Nasdaq Composite increased 0.8% and the S&P 500 gained 0.9%.
The best performing non-leveraged exchange traded products over the past month include the Global X China Materials ETF (NYSEArca: CHIM) up 29.1%, Global X China Industrials ETF (NYSEArca: CHII) up 28.5% and Global X NASDAQ China Technology ETF (NasdaqGM: QQQC) up 25.9%.
Chinese company stocks traded on the Hong Kong stock exchange were leading the charge over April on pent up demand, following the rally in mainland China’s market. [China H-Shares ETFs Get Their Moment in the Limelight]
Fueling the trades, mainland investors were using up their quota to invest in Hong Kong through the recently adopted Shanghai-Hong Kong Stock Connect program for the first time since it began in November. Notable interest came from mainland mutual funds accessing Stock Connect, which was previously limited to wealthy individuals. Many mainland investors were piling into Hong Kong-listed Chinese company stocks, capitalizing on the steep discounts to mainland-listed share prices.
Moreover, Chinese equities were rallying in response to the People’s Bank of China’s new stimulus measures, including lowering the cash reserve requirements for big banks. The central bank is also planning more initiatives down the line, including a so-called Pledged Supplementary Lending program that would allow banks to use local government bonds as collateral for loans from the central bank, reportsAlan R. Elliott for Investor’s Business Daily.
The worst performing non-leveraged exchange traded products over the past month include the UBS ETRACS ISE Exclusively Homebuilders ETN (NYSEArca: HOMX) down 15.2%, iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) down 14.9% and VelocityShares Daily Long VIX Short-Term ETN (NYSEArca: VIIX) down 14.8%.
Despite the fall off in the last few days of the month, the equities market were largely strengthening through April.
The month started off on a positive note, with improved housing and personal income data.