After a strong run from the March lows, China ETFs have fallen into a 4 week losing streak.
The $10 billion iShares FTSE-Xinhua China 25 Index Fund (FXI) was recently up 89% from early March before hitting the skids at the end of July. FXI and other China ETFs will likely open lower this week due to an overnight drop in China’s benchmark stock index, the Shanghai Composite, which fell 6.7% to 2667.75, its lowest finish since May.
FXI invests in the 25 largest and most liquid companies in the China equity market that are available to international investors. Top holdings include China Mobile, China Construction Bank, China Life Insurance, Industrial & Commercial Bank of China and Bank of China.
Chinese bank stocks have been especially hit hard as lending has slowed dramatically in July and August from the first half of the year. Putting additional downward pressure on stock prices are the recent announcements by several Chinese companies, including the Bank of China, of plans to raise funds by issuing additional equity.