Chinese Stocks, ETFs On Massive Growth Path As Country Reopens After 3 Years Of Zero COVID Policies

Zinger Key Points
  • Investors and analysts are bullish on China's recovery after years of harsh COVID lockdowns.
  • Stocks took a slight drop on Monday but the outlook remains positive for February and March.

It’s been three weeks since Beijing ordered the reopening of China’s borders to the world, and Chinese stocks are rallying.

The world’s second largest economy abruptly ended three years of strict zero-COVID policies late last year, causing a massive spike in COVID cases.

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The rapid reopening of China came with a positive response from the markets: reopening measures brought huge spikes to major U.S.-listed Chinese companies and ETFs.

  • The iShares MSCI China ETF MCHI, the largest Chinese ETF by assets held, providing exposure to large and mid-sized companies in China, rallied 57% between Oct. 31 and Jan. 27. The ETF was trading $54.30 at the time of writing, slightly down from $56 on Friday.
  • The SPDR S&P China ETF GXC experienced a very similar growth path, gaining 51.5% between Oct. 31 and Jan. 27, dropping slightly Monday to a price of $89.
  • Other Chinese ETFs including KraneShares CSI China Internet ETF KWEB, Invesco China Technology ETF CQQQ and Xtrackers Hvst CSI 300 China A-Shs ETF ASHR show similar trajectories since late October, peaking on Friday, Jan. 27 and pulling back Monday. 
  • The CSI 300 Index, known as the Chinese counterpart to the S&P 500, is up 19.75% on Monday since a 2022 low on Oct. 31.

These large-cap Chinese stocks are also on a growth trajectory:

  • E-commerce giant Alibaba Group BABA is trading at $112 on Monday, up a whopping 77.7% since a 2022 low of $63 on Oct. 24.
  • Its competitor JD is trading at $60.20, up 64% in the same time frame. 
  • Agriculture platform Pinduoduo Inc PDD reached 135% growth Friday from its October low. The price dropped slightly on Monday to $97, but the stock is still up by 118% since Oct. 24.
  • Baidu BIDU, known as the “Chinese Google,” saw its price rise by 84.4% since Oct. 31 to reach $141 on Monday.

The Financial Times calculated the rally for copper, iron ore and Chinese tech stocks has reached $700 billion since October lows.

On Monday, Bloomberg called an end to China’s rally, as some of its benchmark stocks pulled back slightly after Friday peaks, but said a majority of analysts continue to have a bullish view on the Chinese economy, with spending and travel data pointing to a “solid recovery underway.”

Shutterstock image.

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