(Nov 19): Exchange-traded funds that buy Chinese stocks continue to see outflows amid rising concerns over the nation’s growth outlook and the risk of new tariffs under a Donald Trump administration.
The US$8.2 billion (RM36.6 billion) iShares China Large-Cap ETF, known by its ticker FXI, saw US$984 million in outflows last week, the most on record, extending a five-week streak of withdrawals. The KraneShares CSI China Internet ETF, ticker KWEB, recorded US$710 million in outflows over the same period.
Chinese stocks have been under growing pressure in recent weeks on doubts that Beijing’s stimulus will prove to be effective to lift consumer spending. Higher US tariffs threatened by Trump and his cabinet picks to date have also weighed on sentiment.
“Western investors that were previously chasing momentum haven’t seen enough near-term improvement in Chinese growth numbers and government sentiment toward business,” said Andy Wester, a portfolio manager at Sandia Investment Management.
Last week in particular, Chinese tech stocks listed in Hong Kong underperformed as investors reduced their risk exposure ahead of earnings.
Markets in general have turned more cautious on Chinese stocks as persistent deflationary pressures and geopolitical tensions cloud the outlook for earnings. Morgan Stanley strategists reduced Chinese equities to a slight underweight within the region, while Goldman Sachs Group Inc trimmed its index target on the MSCI China Index to reflect a less favorable macro backdrop.
The MSCI China Index has dropped 16% from a recent peak in early October as investors reevaluate risks looming in the world’s second-largest equity market.
“Any immediate downside in Chinese stocks might be a tariff panic, which may be warranted,” Wester said. “Long-term, probably a buying opportunity.”
Markets got some relief on Monday as stock indexes in China and Hong Kong rebounded from last week’s sell-off, fuelled by financial stocks. Chinese state-owned companies’ stocks also got a boost after the country’s securities regulator issued a supportive guideline on boosting corporate valuation.
Uploaded by Jason Ng