By John Spence & Tom Lydon
The iShares FTSE China 25 (FXI) is down 12% from its 2013 high even as the Dow Jones Industrial Average sets new records, illustrating the divergence between emerging and developed markets do far this year.
Now, JP Morgan (JPM) has downgraded China to underweight and recommended bearish bets against the country's largest banks.
"Growth momentum is now slowing with policy response constrained; a nasty combination," Adrian Mowat, JP Morgan's chief Asia and emerging-market strategist, wrote in a note Monday, Bloomberg News reports.
FXI, the Chinese ETF, has dropped below its 200-day exponential moving average.
Earlier this month, the government unveiled new measures designed to cool property prices.
Guggenheim China Real Estate (TAO) is off about 13% from its 52-week high recorded in January.
"Investors are concerned about the possibility of slowing growth and monetary tightening," Wu Kan, a fund manager at Dazhong Insurance Co., told Bloomberg.
iShares China FTSE China 25