Investor confidence is waning in Chinese markets as a slowing economy and weakening yuan currency drag China A-shares related exchange traded funds to their lowest in 13 months.
China A-shares ETFs that track mainland Chinese stocks traded in Shanghai and Shenzhen declined Tuesday, with the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR) down 3.3% and trading near its lowest since November 2014. Additionally, the KraneShares Bosera MSCI China A ETF (NYSEArca: KBA) decreased 3.9% and Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK) dropped 3.9%.
Meanwhile, the Direxion Daily CSI 300 China A Share Bear 1x Shares (NYSEArca: CHAD), which takes the inverse exposure to Chinese A-shares, gained 2.9% Tuesday. CHAD has increased 20.8% over the past month.
The Shanghai Composite Index dropped 6.4% to 2,749.8 at the close Tuesday, falling toward its lowest level since November 2014, Bloomberg reports.
“It’s an issue about confidence and there’s no confidence in the market now,” Wu Kan, a fund manager at JK Life Insurance Co., told Bloomberg. “The depreciating yuan and slowing economic growth have been haunting the market for a while. We are less than two weeks from the spring festival and it seems that most investors are in no mood to trade any more.”
Even a 440 billion yuan, or $67 billion, stimulus package from the People’s Bank of China was not enough to stem the fallout in Chinese equities.
Outflows continued at a rapid clip in December, with investors pulling a record $1 trillion from the market in 2015, or over seven times higher than the whole of 2014.
“Capital outflows and demand for cash before Lunar New Year may weigh on the stock market in spite of the recent massive fund injection from the PBOC,” Huang Cendong, an analyst at Sinolink Securities Co., told Bloomberg.
ASHR has seen relatively no asset flows so far this year, but over the past year, the China A-shares ETF experienced $655.1 million in outflows, according to ETF.com. ETF investors may also be growing cautious of the sell-off in Chinese markets, with CHAD showing $49.0 million in outflows year-to-date, despite returning 16.9%.
Deutsche X-trackers Harvest CSI 300 China A-Shares ETF
Source: Yahoo! Finance
Max Chen contributed to this article.