Chinese ETF Market Explodes With 5X Increase In Inflows Over 3 Years Despite Some Ceasing Operations In US


The Chinese exchange-traded funds (ETFs) market has seen a fivefold increase in investments over the past three years

What Happened: As per Morningstar, the inflow into Chinese ETFs has experienced “staggering” growth, consistently reaching new highs over the last five years, CNBC reported on Tuesday. Wanda Wang, Morningstar’s Research Manager, mentioned that the annual inflows to China ETFs surged almost fivefold in the past three years.

Data from the American financial services firm shows that the total yearly inflows to Chinese ETFs swelled from 127.2 billion yuan ($17.49 billion) in 2021 to 387.2 billion yuan ($53.2 billion) in 2022. In 2023, this figure hit 604.3 billion yuan ($83.05 billion).

By the end of 2023, the total assets under management (AUM) of ETFs in China more than doubled that at the end of 2020, reaching 1.82 trillion yuan ($250 billion).

“The growth of the Chinese ETF market over the past few years is explosive,” Wang said.

Despite the volatility, the ETF market in China tends to be concentrated in leading providers like China Asset Management, E Fund Management and Huatai-PineBridge, which are the three largest ETF providers by AUM, Morningstar noted.

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Why It Matters: This surge in Chinese ETFs comes despite a record number of U.S.-listed China-focused ETFs closing down in 2024 due to growing investor concerns about the world's second-largest economy. According to data from Morningstar Direct, 13 U.S.-listed China ETFs ceased operations in the first quarter of 2024 alone.

Chinese stocks had witnessed a significant rally in the first part of the year, reviving investor bets on a more serious and robust recovery. The SSE Composite Index, which includes all stocks listed on the Shanghai Stock Exchange, reached its highest level since September 2023, showcasing a rally of about 19% from the lows in 2024.

Price Action: On Wednesday’s pre-market, the KraneShares Trust KraneShares CSI China Internet ETF KWEB was trading 0.75% lower at $27.83 after it closed at $28.05 on Tuesday. The iShares MSCI China ETF MCHI was trading at $42.56 during the same time after it closed at $42.87 on Tuesday. The iShares China Large-Cap ETF FXI closed at $26.25 on Tuesday and was trading 0.79% lower at $26.29. The Franklin FTSE China ETF FLCH closed at $16.82 on Tuesday.

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Photo courtesy: Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

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