A U.S.-listed exchange traded fund that invests in Chinese stocks jumped more than 5% on Monday as China’s financial markets reopened after closing last week for the National Day holiday.
China’s Hang Seng Index fell to its lowest close since May 2009 earlier this month. Any perceived weakness in the Chinese markets will be closely looked at as China is considered a major driver of the global economy.
“When the macro environment is bad, it negatively affects the micro environment in Hong Kong,” Francis Lun, managing director at Lyncean Holdings Ltd., previously stated, reports Bloomberg. “Investors are trying to get out of the stock market and wait for it to bottom out.”
However, the index gained traction Thursday and continued to pickup momentum on Friday, trading up 3.1% on the day and almost 9% higher in two days, reports Clement Tan for Reuters.
“It’s too negative to short the market further unless you expect a total collapse in earnings,” said Peter So, CCB International’s co-head of research. “Many industries are still seeing double-digits earnings growth, it’s too risky to be in a short position when they report earnings later this month.”
iShares MSCI Hong Kong Index Fund
Max Chen contributed to this article.