Stocks in China are hot, and I mean smoking hot, with HUGE gains during the past month.
The table below shows just how powerful the upside has been in exchange-traded funds (ETFs) pegged to the various segments of the Chinese equity market. From small caps to financials to technology to A-shares, the bull market is in full effect in China. Here’s a list of the top funds by Month-to-Date (MTD%) percentage gains (funds over $50 million in assets).
|HAO||GUGGENHEIM CHINA SMALL CAP E||22.19||260.91|
|CHIQ||GLOBAL X CHINA CONSUMER ETF||15.50||116.11|
|CHIX||GLOBAL X CHINA FINANCIALS||15.05||102.10|
|CQQQ||GUGGENHEIM CHINA TECHNOLOGY||14.06||103.51|
|FXI||ISHARES CHINA LARGE-CAP ETF||13.99||6,888.78|
|MCHI||ISHARES MSCI CHINA ETF||13.93||2,234.22|
|GXC||SPDR S&P CHINA ETF||13.66||1,267.50|
|YAO||GUGGENHEIM CHINA ALL-CAP ETF||13.06||58.40|
|KWEB||KRANESHARES CSI CHINA INTERN||12.02||153.78|
|ASHS||DEUTSCHE X-TRACKERS HARVEST||9.33||64.16|
|PGJ||POWERSHARES GLD DRG CHINA||8.66||226.67|
|ASHR||DEUTSCHE X-TRACKERS HARVEST||7.13||1,233.89|
|PEK||MARKET VECTORS CHINAAMC A-SH||6.90||119.40|
|CNXT||MARKET VECTORS CHINA AMC SME||6.33||66.72|
As you can see, funds like the Guggenheim China Small Cap (HAO), with a 22.19% gain, and the Global X China Consumer ETF (CHIQ), up 15.5%, are lighting up the performance charts.
Now, there are many reasons for the latest move higher in Chinese stocks, including the government’s recent announcement of plans to build additional ports, railways and roads.
Then there’s the question of valuation.
Despite their recent run higher, Chinese stocks actually are cheap. At a current price-to-earnings ratio (P/E) of 10, stocks in China are cheap compared to the S&P 500, which currently trades at a P/E of about 17. This tells us there’s more value in Chinese stocks, and that’s another reason why money will likely keep flowing to China.
Yet perhaps the big driver here is the People’s Bank of China, which has tipped its hat on plans (or at least the willingness) to lower interest rates if the economy doesn’t meet the 7% gross domestic product (GDP) growth target.
For Chinese policymakers, this benchmark is crucial, and they know it. And given the demonstrated link between accommodative central bank policy and higher nominal stock values, it’s no wonder why Chinese stocks are spitting bullish fire.
Right now, subscribers to my Successful ETF Investing newsletter are profiting from several ETFs pegged to China and the Chinese economy. If you’d like to know how to get in and ride the Chinese dragon higher, then I invite you to check out Successful ETF Investing today.