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China Outperforms U.S. Stocks By 15%

Mar. 04, 2020 11:39 AM ETAMZN, ASHR, BABA, BIDU, CHIQ, CHIX, CHL, KURE, KWEB, MCHI, SPY11 Comments


  • In February 2020, the S&P 500 finished down almost 8% in a month finished by the US market's fastest 6-day, 10% drop since 1933 on news of Covid-19's spread.
  • Meanwhile, China's A-share market rose over 8% over the same month, while the more offshore MSCI China index rose 3.3%, bouncing from a January similar to the US market's February.
  • An optimist might say this reflects the impacts of coronavirus within China may have peaked, and be echoed ex-China with a roughly one month lag.
  • Longer-term, what matters to stock valuations is what the overall impact to corporate earnings will add up to.  This will of course hit different sectors differently.
  • Looking for a helping hand in the market? Members of Long Run Income get exclusive ideas and guidance to navigate any climate. Get started today »

I usually try and tune out shorter-term noise and returns, but find stock market corrections like the one last week (the fastest since 1933) useful for looking at risk exposures and how information gets reflected in prices.

First of all, let's take a look at some numbers comparing recent price returns of three different benchmarks:

  1. The world's largest and most liquid ETF tracking the US' S&P 500, the SPDR S&P 500 Trust ETF (SPY), and
  2. The largest US-listed China ETF, tracking a broad institutional benchmark of mostly US and Hong Kong listed shares: the iShares MSCI China ETF (MCHI), and
  3. The largest US-listed tracker of China's main onshore benchmark of Shanghai and Shenzhen listed shares, the Xtrackers Harvest CSI 300 China A-shares ETF (ASHR)

For background, you can also refer to my earlier articles about the difference between onshore vs offshore listed Chinese stocks, how to choose China ETFs, and why I avoid funds tracking the S&P 500.

China vs. US Stock Returns Since The Coronavirus Outbreak Started

The below three charts compare the returns of SPY vs. MCHI and ASHR over three different time periods: the past one week, the past one month, and past three months.

In the last week of February 2020, when US markets seemed to first take the risk of the spread of the coronavirus disease Covid-19, SPY fell over 11%, while MCHI and ASHR each fell "only" around 3%. For reference, the map of coronavirus cases I have been checking most often is this one from Johns Hopkins, which shows a chart of cases within vs outside Mainland China in the lower right hand corner.

Over the whole month of February 2020, we see SPY fell almost 8% over the course of the month, while MCHI and ASHR fell 3.3% and 8.1% respectively.

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This article was written by

Tariq Dennison profile picture

Tariq Dennison, runs an RIA focused on international clients and portfolios, applying his on-the-ground experience as an expat investing in diverse foreign markets. Tariq is the author of the book "Invest Outside the Box" and soon-to-be-released "10 Ways To Invest." He lives in Switzerland, and has worked in Finland, Canada, the UK, Hong Kong, and Singapore.

Tariq is the leader of the investing group The Expat Portfolio where he helps members invest internationally with greater clarity and confidence. Features of the service include: Frequent, short, and focused analysis, access to his watchlist and dashboard, guides to specific foreign markets, and direct access to Tariq and his community in chat for discussion and questions. Learn more.

Analyst’s Disclosure: I am/we are long CHL, BIDU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

5ofDiamonds profile picture
"China Outperforms U.S. Stocks By 15%" @Tariq Dennison

Not really. It should be "China Outperforms U.S. Stocks By 15% in Feb, 2020".

If I check the performance of $ASHR or $MCHI in the last 10 years. They have gone absolutely nowhere in that decade.

My 1c.
Tariq Dennison profile picture
Thanks, @5ofDiamonds - the title I originally tried to submit was "China Outperforms US Stocks by 15% As Coronavirus Goes Global", and don't remember when that got trimmed to the shorter title.
I am not sure whether it is good time to project the bright future for China's growth, China seems to be desperate by sending Uighur to forced labor factories. Sooner later these forced labor could get hit with the virus. Even though China says their virus situation is contained, do we know really what is going on?


leftside profile picture
CWEB is a good long term (tho often stomach churning) bet. Still far from it’s all time highs.
uuhhhmmmm....you do realize that the Chinese CAN'T sell their stocks if the Chicom gov doesn't want them to, which is what is going on right now, DON'T YOU?
Kinda like when the circuit breakers trip in the US.
Tariq Dennison profile picture
There's no restriction on selling H-shares, so the onshore A-share restrictions you might be referring to could be one reason the AH premium rose from 124 back to around 130 recently: markets.ft.com/...
blacky_ profile picture
Of course it is 15%. Surprised that it is not more. The whole chinese stock market is rigged from front to back - a blind man can see that (hardly any days in "red" during an epic pandemic in which weeks of 0 production happened). Ridiculous.
Or maybe they have stones. Selling 10% of the market in two days because a few people got sick here is ridiculous.
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