China ETFs have led the gains for monthly returns after investors reapproached the region on low valuations and strong financials from the likes of Alibaba and Tencent.
After a drawn out slump across 2023, handsome China ETF returns show investors could have much to gain should they choose to allocate to the world's second largest economy’s recovery in recent months.
The top-performing ETF for the month to date was the KraneShares CSI China Internet UCITS ETF (KWEB), returning 25.8% over the last month.
KWEB saw returns of -8.7% across the same period last year, and -14.7% across the whole of 2023.
KWBE has a 10.5% weighting to Tencent, followed by Meituan (8.3%) and Alibaba (8.15%).
Tencent saw its Q1 profits rise 62% as the company sharpened its focus on higher margin businesses like advertising and e-commerce and has seen its share price rise 30% since the start of the year.
Following suit was the HSBC Hang Seng Tech UCITS ETF (HSTC), pulling in returns of 22.9% over the past month, while returning -6.4% across the same period last year and -13.9% in 2023.
HSTC captures the 30 largest tech stocks listed on the Hong Kong stock exchange, with Meituan (9.6%), JD.com Inc (9.3%) and Xiaomi Corp. (8.9%) as the top three holdings.
Finally, The Xtrackers FTSE China 50 UCITS ETF (XX25) and the iShares China Large Cap UCITS ETF (FXC) returned 19.6% and 19.5%, respectively.
Resurgence in the Chinese market has been predicted by many investors who have tied the comeback to historically low valuations and robust financial fundamentals of China’s largest companies.
These factors were redoubled by stronger economic data in Q1, with a 5.3% increase in GDP, industrial sector growth and household spending rising by 8.3% in the first quarter.
Further bolstering sentiment surrounding China, Micheal Burry’s Scion Asset Management bought shares of JD.com Inc and Alibaba in May after exiting the positions in 2023.
