:max_bytes(150000):strip_icc()/INV_ChinaStockBoard_GettyImages-1364316860-7de786ae1f5c4d279f891a7a351b7322.jpg "China’s Growth Slowdown Hits China-Focused ETFs and Stocks")
:max_bytes(150000):strip_icc():format(jpeg)/INV_ChinaStockBoard_GettyImages-1364316860-7de786ae1f5c4d279f891a7a351b7322.jpg)
Key Takeaways
- China’s latest gross domestic product data, released Monday, missed analysts’ expectations by a wide mark, leading to losses in Chinese equities.
- There was a ripple effect in China-focused U.S. exchange-traded funds, with BlackRock’s iShares MSCI China ETF and iShares China Large-Cap ETF both off more than 2% Monday.
- Monday’s declines follow a rebound in China-focused ETF inflows earlier this year.
China’s stuttering economic rebound suffered another blow in the latest quarter, leading to losses in New York-listed Chinese stocks and China-focused exchange-traded funds (ETFs) on Monday.
China’s gross domestic product (GDP) rose 4.7% year-over-year in the second quarter, below analyst expectations, pressured by a prolonged real estate slump and trade tensions. The rise was smaller than the 5.3% growth recorded in the first quarter and below the 5% expected by economists surveyed by The Wall Street Journal.
The data for China is a blow to investors after a rebound earlier this year—driven by Chinese government policy and stimulus—led to an upsurge in inflows to China-focused ETFs.
US-Traded China Stocks, ETFs Hit
The growth slowdown in China sent a ripple effect across the market for Chinese American depositary shares and China-focused ETFs on Monday.
E-commerce giant Alibaba (BABA) finished down 2.1%, while PDD Holdings (PDD), owner of e-commerce platform Temu, and JD.com (JD), another e-commerce retailer, were down 3.1% and 5.3%, respectively.
The losses in large-capitalization Chinese stocks hurt China-focused ETFs, with the $5.7 billion iShares MSCI China ETF (MCHI) run by BlackRock losing 2.1%. Alibaba and PDD Holdings are among the fund’s largest holdings.
Another popular Chinese ETF pummeled by the news was the iShares China Large-Cap ETF (FXI), with $4.7 billion in assets, which lost 2.2% on Monday. The largest holding in the fund is Alibaba.