Global Capital Keeps Buying; US's Largest China ETF Surpasses $10B

Last week, some hedge funds began to adjust their strategic layouts. However, passive funds continue to flow into Chinese assets.

Recently, the Chinese market has bottomed out and rebounded, with a surge of funds flowing in, leading to significant growth in the scale of some Chinese stock ETFs. As of now, the largest China stock ETF listed in the United States has exceeded 10 billion US dollars, reaching 10.58 billion US dollars.

It is reported that this is the first time a China stock ETF listed in the United States has exceeded 10 billion US dollars. In the bull markets of Chinese stocks in 2015, 2019, and 2020, there was no single China ETF listed in the United States with a scale exceeding 10 billion US dollars.

Since the press conference on September 24, FXI has seen net inflows of 43.5 billion yuan.

FXI is issued by iShares, an ETF brand under the global asset management giant BlackRock, tracking the FTSE China 50 Index, covering the 50 largest market value and most liquid stocks listed in the Hong Kong market.

According to reports from the China Fund News, on September 24, a regulatory body announced a package of policies to stabilize the market and support economic growth. Since then, the scale of FXI has soared. From September 23 to October 10, FXI received net purchases of 6.151 billion US dollars.

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As of October 10, the scale of FXI was 10.58 billion US dollars. The top ten holdings of FXI include Meituan, Alibaba, Tencent Holdings, JD.com, China Construction Bank, Xiaomi Group, Ping An Insurance, BYD, Bank of China, and Industrial and Commercial Bank of China, among others.

As of October 10, 2024, the largest China stock ETFs listed in the United States include FXI - tracking the FTSE China 50 Index, KWEB - tracking the China Internet Index, MCHI - tracking the MSCI China Index, ASHR - tracking the CSI 300 Index, and YINN - triple long FTSE China 50 Index.

The scales of these five ETFs are 10.58 billion US dollars, 7.42 billion US dollars, 6.25 billion US dollars, 2.96 billion US dollars, and 2.48 billion US dollars, respectively.

Global capital is accelerating the "shopping" of Chinese stock ETFs.According to reports, journalists have discovered through data statistics on the ETF tracking website etf.com that from the release of the "924 policy combination punch" to the last trading day of last week (September 24th to October 4th), the five largest ETFs in the United States focused on Chinese stocks have collectively attracted nearly $4.6 billion in inflows.

At the same time, ETFs related to Chinese stocks in markets such as the United Kingdom, India, the Middle East, and Japan have also seen a collective surge. Among them, the A-share Southern China Zhongzheng 500 ETF in the Japanese market rose by 1572%.

Market observers have indicated that funds that previously left the Chinese stock market for Japanese and Southeast Asian stock markets are about to flow back.

As reported by Caixin, data from Paris-based data analysis company TrackInsight shows that more than twenty Chinese ETFs listed in the United States achieved double-digit returns within a week, with increases ranging from 10% to 28%, outperforming more than 3,000 other ETFs traded in the U.S. market.

Michael Barrer, head of ETF capital markets at MatthewsAsia, an asset management company, stated that when the market experiences such significant and violent fluctuations, products linked to indices will see capital inflows first.

Some American institutions have taken a different approach. Roundbill, an American investment advisory firm, recently launched an ETF called the China Dragon, which focuses on nine of the largest and most innovative technology companies in China, including Meituan, Xiaomi, BYD, JD.com, Tencent, Pinduoduo, Alibaba, Baidu, and NetEase. According to the company's CEO, Dave Mazza, the ETF attracted $35 million in net inflows during the first two trading days after its listing.