The iShares China Large-Cap ETF (NYSEArca: FXI), the largest China exchange traded fund listed in the U.S., is up more than 13% year-to-date and that is just one sign equities in the world’s second-largest economy offer more upside potential as emerging markets stocks continue surging.
Ongoing reforms, notably from the supply side, could further support Chinese economic growth. Reforms have bolstered industrial profitability and strengthened commodity prices. China’s exporters are also enjoying improvements from a rebound in global trade.
The Chinese economy is also shifting towards domestic-oriented consumption as a main growth driver. Consequently, consumption-driven sectors liek technology and services are becoming a growing component in the economy.
“The Shanghai Exchange (SSEC) went through a very important bull market test last year, and successfully passed the test, see 2800 points. That was the ultimate confirmation that the bull market would continue,” according to ETF Daily News. “Third, the bull market will remain silent as long as SSEC trades below the middle trend line within the channel. Once above it, the bull will become violent. Fourth, China has a strong reputation of moving in a very aggressive way once a bull market starts heating up. Expect fireworks somewhere in the coming years, similar to 2015.”