Tag Archives: $ASHR

The Real Driver Behind China ETF Action: Column A and Column B

MarketsMuse.com ETF update profiles the real driver behind the surge in China-focused exchange-traded funds courtesy of below extract from 28 April a.m. column by Todd Shriber of ETFtrends.com “Surprising Drivers of the A-Shares ETF Surge.”

It is not a secret that exchange traded funds holding Chinese equities, both A-shares trading on the mainland and Hong Kong-listed H-shares, have recently been delivering staggering returns.

Over the past month, the top 13 non-leveraged ETFs are all China funds, according to ETFScreen.com. That group includes 4 A-shares ETFs, an impressive number considering there are just seven such funds trading in the U.S. Year-to-date, seven of the top 11 non-leveraged ETFs are China funds, four of which hold A-shares.

Beijing-controlled companies have been driving the Shanghai Composite higher, creating a divergence between that benchmark index and the Shenzhen Stock Exchange Composite Index. (See Dec 2014 ETFtrends.com for background)

“The explanation for this divergence revolves around State Owned Enterprises,” said Rareview Macro founder Neil Azous in a note out Monday. “The Shanghai Index is composed of ~68% SOE and ~32% non-SOE whereas the Shenzen Index is only 22% SOE and 78% non-SOE.”

Granted, it is just a small data set, but over the past week the SOE-heavy ASHR and PEK have performed in-line with the Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS) as each have raced to all-time highs.

Azous notes that speculation about China’s plans to possibly reduced the number of SOEs via mergers has contributed to the rally. For example, there is speculation that PetroChina (NYSE: PTR) and China Petroleum & Chemical could be merged to create that country’s equivalent of Exxon Mobil (NYSE: XOM). Those stocks combine for almost 1% of ASHR’s weight.

For the entire article by ETFtrends.com Todd Shriber, please click here

China ETFs Seeming More Like The Year Of The Bear

MarketMuse update courtesy of ETFTrends’ Todd Shriber looking at China related ETFs. 

In the Chinese zodiac, 2015 is the year of the goat, but a popular exchange traded fund tracking China’s onshore equities is getting bearish treatment.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca: ASHR), the largest U.S-listed A-shares ETF, had 6.3% of its shares outstanding sold short as of Feb. 23, reports Belinda Cao forBloomberg.

ASHR surged 51.3% last year, making it one of 2014’s best-performing non-leveraged ETFs. That performance was better than quadruple the showing by the iShares China Large-Cap ETF (NYSEArca: FXI), the largest U.S.-listed China ETF. However, the 2014 A-shares rally has those stocks looking richly valued relative to their Hong Kong-listed counterparts, encouraging traders to up bearish bets on ASHR.

“The number of shares borrowed and sold short to profit from a decline in Deutsche Bank’s A-share ETF was 1.8 million on Feb. 23. That’s close to the record of 2.4 million, or 8.2 percent of total shares outstanding, reached Feb. 13,” Bloomberg reports, citing Markit data.

However, another catalyst could be encouraging the increased bearish bets on ASHR. On Jan. 21, Deutsche Asset & Wealth Management (DAWM) was forced to limit creations of new shares in ASHR because increased demand for the ETF was forcing the fund o bump up against their respective Renminbi Qualified Foreign Institutional Investor (RQFII), which allows the funds to purchase A-shares equities

Creation limits often lead to ETFs, particularly those with exposure to markets that are closed during the U.S. trading day, trading at premiums to net asset value. Professional traders then look to profit from the gap between the ETF’s market price and lower NAV by shorting the ETF. Since the start of 2015, ASHR has traded at a premium to its NAV in 26 days, according to DAWM data.

Although the most recently announced creation limit for ASHR has not yet been lifted, it should be noted the ETF was affected by the same scenario twice in 2014 and DAWM was quick to get ASHR’s RQFII limit increased.

With ASHR’s 2014 surge, some money managers now prefer H-shares to A-shares, but that means they are also missing out on a notable rally in A-shares small-caps.

The Deutsche X-trackers Harvest CSI 500 China A-Shares Small Cap Fund (NYSEArca: ASHS), which was subject to a second creation limit last November, is up 12.1% this year. ASHS tracks the CSI 500 Index of Shanghai- and Shenzhen-listed small-caps.

The Market Vectors ChinaAMC SME-ChiNext ETF (NYSEArca: CNXT), the younger of the two A-shares small-cap ETFs, has surged 23.7% year-to-date, making it 2015’s top-performing non-leveraged ETF. CNXT, which is heavily allocated to mid-caps, tracks the SME-ChiNext 100 (SZ399611), which provides exposure to the 100 most liquid mid- and small-cap stocks that trade on the Small and Medium Enterprise (SME) Board and the ChiNext Board of the Shenzhen Stock Exchange (SZSE).


China Marts Open For Lunch & Dinner: ETFs Hot Menu Item; Fortune Cookie Reviews Say: “Sweet, Sour & Soggy”

chinesemenuA MarketsMuse special update, courtesy of compiling various columns from Bloomberg, ETF.com, Fortune and a special treat: this piece was sponsored by Mr. Chow’s! (see below)

After much fanfare, the “Shanghai-Hong Kong Stock Connect” is officially connected and ostensibly, this will be the link between brokers, dealers, ETF Issuers and global investors seeking access to a menu of mainland China stocks and bonds, whose market value is more than $4.2tril (if anyone knows another acronym for ‘Trillion”, please email us or simply comment below!). Even if trade volumes during the first 2 days appeared soggy (which some attribute to aversion to MSG, not China stocks or ETFs), this is a story that, according to many experts, is a watershed moment.

Noted Neil Azous, principal of global macro strategy think tank, Rareview Macro LLC,  “This is a transformational event. Though the first day ‘scorecard’ indicates that retail/local investor support in Shanghai has proven successful out of the gate, institutional interest is still nascent, as evidenced by the big drop in Hang Seng share prices yesterday.” Added Azous, “Because the liberalization of markets is 1 of 4 key anchors to China’s long-term game plan, it is easy to expect that the opening of China markets to foreign investors might be incremental, but also integral to the evolution of the global financial marketplace.”

Below please find a collection of excerpts and ETF mentions that MarketsMuse has ‘cherry-picked’ from news outlets: Continue reading

International ETF Launches Lead Growth of Exchange-Traded Funds; A Chinese Menu

etfcomlogoBelow courtesy of extract from today’s ETF.com and their reporter Heather Bell.

Year-to-date through the end of July saw 118 fund launches versus 86 during the same time period last year. However, what’s notable about the increase in launches is the fact that it is driven almost entirely by international equity ETF. In the first seven months of 2014, 55 ETFs targeting that space made their debut versus a mere 25 international equity funds in the first seven months of last year. Among this year’s launches, there are some very clear themes in international equities.

At least 18 of those international equity ETFs could be considered smart-beta or factor-based funds, ranging from the Market Vectors International Quality ETF (QXUS) to the iShares MSCI Europe Minimum Volatility ETF (EUMV) to the JPMorgan Diversified Return Global Equity ETF (JPGE).

Currency Hedging In Vogue Continue reading