masterSergeant/iStock via Getty Images
US investors remain lukewarm on Hong Kong and China equities, according to a recent BNP Paribas China Equities Focus report.
Despite Chinese equities strong performance, there have not been any material inflow to China (FXI), (NASDAQ:MCHI) or emerging markets-related ETFs (EEM), (VWO), (IEMG) last week, wrote Jason S. Lui, head of East Asia Strategy for BNP Paribas.
There have also been small outflows from China-focused ETFs.
Three factors could be due to three factors, he said.
- The rebound in the U.S. semiconductor sector (SOXX), which is up about 14.46% year-to-date, and the mega tech stocks (IXN), (XLK).
- Some possible ongoing skepticism about China’s economic recovery due to prior policy disappointment.
- The structural shift of investment benchmarks. For example, the iShares MSCI Emerging Markets ex China ETF attracted $3.8B inflows so far this year.
“The divergence of Hong Kong turnover and US ETF inflows suggests some of the heavy buying last week may have come from more emerging markets/Asia-dedicated investors, rather than the overall global equity investors,” Lui said.
