U.S. investors are plowing into Chinese stocks as zero-COVID protests in China encourage investors that the country’s economy could rebound sooner than expected.
The Invesco China Technology ETF (CQQQ) has increased over 2% in mid-day trading Monday after a sharp decline on Friday, following widespread demonstrations in China against the country’s zero-tolerance approach to COVID-19. While the ETF has rallied nearly 17% in the past month, it is still down 40% year to date as of November 28.
CQQQ is based on the FTSE China Incl A 25% Technology Capped Index, which includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B- shares.
As of November 25, CQQQ has 129 holdings, with the largest being Tencent Holdings Ltd (10.29%), Meituan Class B (7.91%), Pinduoduo Inc Sponsored ADR Class A (7.60%), Baidu Inc Class A (6.23%), and Kuaishou Technology Class B (5.47%), according to ETF Database.
Several large cities in China, including capital Beijing and financial center Shanghai, saw widespread protests over the weekend. The protests followed a deadly fire in Urumqi, capital of the remote region of Xinjiang, on Friday that officials said killed 10 people, as some residents suggested that pandemic restrictions contributed to a delay in putting out the fire, The Wall Street Journal reported on Monday.
China saw nearly 40,000 new locally transmitted cases of COVID-19 on Sunday, according to the National Health Commission. This surge in cases came just weeks after China’s government published a list of 20 measures designed to optimize mitigation of COVID.
CQQQ charges a 70 basis point expense ratio and has $780 million in assets under management as of November 25, according to ETF Database.
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