China ETFs Strengthen, Brushing Off Telecom De-listings | ETF Trends

China A-shares exchange traded funds popped Monday as Chinese manufacturing activity picks up the pace.

On Monday, the Xtrackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), the largest China A-shares related ETF, advanced 1.5% and the VanEck Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT), which tracks the performance of the 100 largest and most liquid China A-share stocks listed and trading on the Small and Medium Enterprise Board and the ChiNext Board of the Shenzhen Stock Exchange, increased 3.9%.

A private survey released Monday revealed Chinese manufacturing activity expanding in December, with the Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) for the month coming in at 53.0 – readings above 50 reflect a positive expansion – CNBC reports.

China’s official manufacturing PMI released Thursday also showed the country’s factory activity expanding last month but at a slower pace compared to the November reading.

Chinese telecommunication company stocks were mixed after the New York Stock Exchange’s announcement that it will delist China Telecom, China Mobile, and China Unicom Hong Kong.

Jefferies analyst Edison Lee argued that non-U.S. investors, whom wouldn’t be covered by the ban, are “bottom-fishing”, the Wall Street Journal reports. Lee believed the business fundamentals of the three de-listed firms had been on the rise.

President Donald Trump previously signed an executive order that would block on Jan. 11 Americans from investing in companies the U.S. government deemed help the Chinese military.

“This is not a problem for the Chinese telecom companies. It is a problem for the U.S. investors that have to sell, locking in their investments at a historically low price,” Peter Milliken, head of Asia-Pacific telecom research at Deutsche Bank, told CNBC.

Milliken argued that the de-listings will not impact the carriers’ businesses since “they are cash-flow machines, not needing to be fueled by new capital from the U.S., or anywhere.”

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