Emerging markets exchange traded funds have been solid performers this year. Making the performances of many diversified emerging markets ETFs all the more impressive is the fact that China, the largest developing economy, is a laggard.
Earlier this year, traders were seen departing the iShares China Large-Cap ETF (NYSEArca: FXI), the largest China-related ETF trading in the U.S., in size. In addition to some economic headwinds, Chinese stocks faltered last month after index provider MSCI said it is again delaying the inclusion of China A-shares, the stocks trading in Shanghai and Shenzhen, in its widely followed emerging markets indexes.[related_stories]
Chinese A-Shares are a specific class of equity securities issued by Chinese companies and denominated in RMB. Under current Chinese regulations, foreign investors may access A-Shares if they are a designated foreign institutional investor or gained access through either the Qualified Foreign Institutional Investor (QFII) or a Renminbi Qualified Foreign Institutional Investor (RQFII) programs.
However, some Asia ETFs have recently been springing to life, a group that includes the iShares MSCI Hong Kong ETF (NYSEArca: EWH).
“The Hang Seng Index in Hong Kong, which often moves in a similar manner with China, broke ranks with the larger market last week by breaking out through resistance. That gave it a series of higher highs and higher lows as well as cementing its cross above its 200-day average,” reports Michael Kahn for Barron’s.
Related: Are China ETFs Ready to Rally?