This week’s market action was dominated by the Federal Reserve’s Federal Open Market Committee (FOMC) statement and the subsequent press conference by Fed Chair Janet Yellen. The key term “patient” was removed from the Fed’s statement, and that was the first step toward setting the table for the first interest rate hike in more than seven years.
The Fed also expressed a bit of concern about U.S. economic growth, and that actually caused traders to interpret the Fed statement as a bit more “dovish” than was previously thought. That means there won’t likely be a rate hike until at least the September FOMC meeting — and maybe even longer.
Now, while stocks in the United States enjoyed a strong week of Fed-induced upside, there was a much bigger bullish move this week in China. In fact, the bull is stampeding through the China shop right now, and that has been a decided trend since the beginning of the year.
The table here of the top 10 performing China ETFs in 2015 tells the tale of a bull in stampede mode.
|CNXT||MARKET VECTORS CHINA AMC SME||41.79||33.601|
|ASHS||DEUTSCHE X-TRACKERS HARVEST||30.86||38.227|
|PEK||MARKET VECTORS CHINA ETF||10.95||97.421|
|KBA||KRANESH BOSERA MSCI CHINA A||10.36||25.399|
|ASHR||DB HARVEST CSI 300 CHINA A||8.92||1,095.455|
|CQQQ||Claymore/AlphaShares China Technology||7.84||93.459|
|CN||DEUTSCHE X-TRACKERS MSCI ALL||7.22||9.318|
|MCHI||ISHARES MSCI CHINA INDEX FD||5.30||1,588.532|
|FCHI||iShares FTSE China (HK Listed) Index||4.08||26.710|
|FXI||iShares FTSE/Xinhua China 25 Index Fund||3.92||6,045.811|
Source: Bloomberg as of 3.20.2015
As you can see, the gains in the segment have been stellar, especially for the so-called China A-shares funds.
The fund I really like, and one that I’m currently recommending in my Successful ETF Investing newsletter, is the DB Deutsche X-trackers Harvest CSI300 China A-shares (ASHR).
This ETF holds the 300 biggest, most liquid stocks traded on the Shanghai Exchange. Year to date, ASHR is up nearly 9%. As you can see by the chart below, this week the shares vaulted to new highs after government officials reiterated a commitment to do more to “stoke economic growth.”
According to analysts at Morgan Stanley, the upside here may just be getting started.
Well known China strategist Jonathan Garner issued a note to clients this week saying that by yearend, the Shanghai index would hit 4,000 and could reach 4,800. That’s another 30% move higher from current levels!
The Morgan Stanley analyst cited several reasons for his bullish opinion on China, including the aforementioned support for growth by policymakers, the current global monetary easing cycle and what he called the “re-engagement in the equities asset class by the local investor base.”
As you likely know, I’ve been a China bull all year. So far, that thesis has proved prescient. If you’d like to find out how my subscribers are making money investing in the best China ETFs out there right now, then I invite you to check out my Successful ETF Investing newsletter, today!