Posted on 09/01/2011
We came across a recent article on MarketWatch entitled "China Manufacturing Gauges Point to Pickup". It reveiwed the recent manufacturing data report for the country, which showed signs of improvement. Below is an excerpt from the article:
"China’s official Purchasing Managers’ Index rose to 50.9 in August, up from July’s 50.7, and was roughly in line with expectations for a reading of 51, according to surveys reported by Reuters and Bloomberg News. The result marked the first increase in activity since March. Meanwhile, a rival survey published by HSBC and U.K. group Markit showed headline activity at 49.9 in August, up from July’s 49.3, and slightly higher than a preliminary “flash” reading of 49.8 issued in August."
While this increase was marginal at best, it is noteworthy because it is the first up month the country has seen in this data for the past 5 months and it occurred during a month which was less than pleasant in the equity markets. An economist from Bank of America-Merrill Lynch, Ting Lu, believes that, "China will achieve annualized growth of about 9% in the six months through December."
Over the course of the past 10 years the Chinese market has become increasingly more accessible to US investors thanks to the growing ETF industry. You can use the Xray tool on AllETF.com to search for funds with exposure to this country, but in addition to the broad based China ETFs, there is one ETF provider who has taken another step forward. Global X Funds launched a suite of China Sector ETFs in late 2009, early 2010, which we -have listed below, along with their year-to-date and August performance. While all of these ETFs are underwater both for the year and the past month, there are some sectors that have been able to outperform the broad Chinese market. For instance, iShares FTSE/Xinhua China 25 Index (FXI), which is the most popular China ETF based on assets under management (AUM), was down 10.35% for the year and 8.81% during August. That means that the CHIB (Technology), CHIQ (Consumer), and CHIE (Energy) are all above this benchmark for 2011. Each of the 6 ETFs are comprised of anywhere from 29-41 Chinese stocks, and have expense ratios of 0.65%.