China ETFs can Deliver in 2017

Broadly speaking, emerging markets equities and exchange traded funds were solid performers last year. For example, the widely followed MSCI Emerging Markets Index gained almost 11%.

That is impressive when considering the largest emerging market, that being China, was an obvious laggard. The iShares China Large-Cap ETF (NYSEArca: FXI), the largest China ETF trading in the U.S., gained just 1.1% in 2016 while the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) tumbled 15.6%.

ASHR is the largest US-listed ETF tracking A-shares, the stocks trading on China’s mainland exchanges in Shanghai and Shenzhen. 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.

After disappointing last year, China ETFs could have better things in store for investors in 2017.