19 February 2024
After three years of disappointing performance, the Chinese market may be turning a corner.
Central Huijin Investment, the equity arm of the state-owned China Investment Corp, announced early February, it had expanded its holdings of ETFs on mainland stock markets. The Chinese Securities Regulatory Commission also issued a statement saying it firmly supported Central Huijin Investment in its plan to increase the scale of its holdings, with the regulator adding it would encourage institutional investors such as mutual funds, state pension funds and insurers to enter the market.
The Chinese market has faced several headwinds over the last three years. Economic uncertainties have weighed on investor sentiment, official data showed that Chinese manufacturing activity contracted for the fourth straight month in January and fears of a wider US ban on Chinese equities has not helped. In addition, Evergrande’s liquidation has not boosted confidence.
Despite these headwinds, we have previously seen the impact from government intervention. The Chinese market rallied from the lows in January 2016 after a similar market rout once the government started to take countermeasures. There is some optimism that the recent bounce might be the start of a meaningful rally.
How do you access China? Below are 3 Australian listed ETFs that give you direct exposure:
- VanEck FTSE China A50 ETF (CETF)
- VanEck China New Economy ETF (CNEW)
- iShares China Large-Cap ETF (IZZ)
