The quarter’s standout performance story came in its final week with Chinese policymakers announcing their broadest stimulus measures since the Global Financial Crisis (GFC) and sparking a rally in Chinese equities.
This helped many China ETFs book their strongest weekly gains on record, with the CSI 300 gaining 15.7% in the final week of the quarter.
China back from the dead?
The stimulus package announced last Tuesday – designed to inject liquidity and unleash lending in China’s ailing economy – triggered a Sino equity rally just days after they booked fresh multi-year lows.
The measures included a $114bn war chest to help asset managers, insurers and brokers purchase local equities and help companies buy back their own stock, prompting commentators to talk of a short-term ‘put’ in the market.
Further momentum was gathered when Chinese policymakers promised the “necessary fiscal spending” to meet the country’s GDP growth target.
This drove stellar Q3 performance for China equity ETFs with the bulk of the gains coming in the final week.
Of ETFs tracking the broad market, the Franklin FTSE China UCITS ETF (FLXC) was the top performer, gaining 23.7% over the quarter.
Those tracking the MSCI China index, such as the Amundi MSCI China UCITS ETF (LCCN) and the Xtrackers MSCI China UCITS 1C ETF (LG9), were close behind returning 23.5% and 23.3%, respectively.
Niche exposures did better still. The KraneShares CSI China Internet UCITS ETF (KWEB) gained 28.3% in Q3 while the Invesco ChiNext 50 UCITS ETF (CN50), which invests largely in mid-caps, returned 37.5%.
Miners strike gold
Gold’s glittering year carried on into Q3 with the precious metal rising 13.3% over the quarter, in US dollar terms.
Its safe haven properties continued to resonate with investors and central banks, while the start of rate-cutting cycles in developed markets further bolstered its momentum.
Gold miners – which typically offer leveraged exposure to the gold price – performed strongly with the L&G Gold Mining UCITS ETF (AUCO) gaining 19% over the quarter to top the performance charts.
Junior gold miners, involved in exploration and early production, lagged slightly with the VanEck Junior Gold Miners UCITS ETF (GDXJ) gaining 15.8%.
Oil slumps on fears of increasing supply
It was a tough quarter for oil, however, despite fears the widening conflict in the Middle East would restrict global supply.
Forecasts of increased output by Saudi Arabia, along with concerns around waning demand, weighed heavily on the price of oil.
The WisdomTree Brent Crude ETP (BRNT), which tracks the Bloomberg Brent Crude Subindex, plummeted 12.4% over the quarter.
Oil-exposed equities fared little better, with the VanEck Oil Services UCITS ETF (OIGB) among the casualties as it fell 9.9% in Q3.
