The China exchange-traded fund (NYSEARCA:FXI) may be a bit of a roller coaster ride for global ETF investors but it has paid handsomely to those who hang on. In FXI's ETF basket are 25 large state-owned or controlled firms that are at the forefront of China's economic expansion.
Although there are other ETF options, iShares FTSE/Xinhua China 25 Index (FXI), has become the benchmark for foreign investment in Chinese markets, and was the best-performing ETF in 2006, up 84%. From these heights FXI fell 20% in a sell-of late February. Now it is now near to where it ended last year. Jonathan Bernstein of ETFzone writes on this issue and charts the course of FXI. He notes that technically minded traders will not hesitate to point out the "head and shoulders" pattern of this recovery, with the left shoulder beginning in September of last year and the neckline being the February sell-off. This pattern is usually seen as a bearish signal.
Other China ETF options include the PowerShares Golden Dragon Halter USX China (NASDAQ:PGJ) which primarily holds ADR's (American Depositary Receipts) of Chinese companies listed in the U.S.. The Hong Kong ETF (NYSEARCA:EWH) is more oriented to financial and real estate firms based in Hong Kong but is still an excellent proxy for Chinese economic growth.