Exchange-traded fund (ETF) investors are showing little confidence that the world-beating rally in China’s domestic stock market will last.
Traders pulled about US$845 million from the CSOP FTSE China A50 ETF in the two weeks through Friday last week, the biggest outflow since the US$5.7 billion fund was started in 2012, according to data compiled by Bloomberg.
The US$9.7 billion iShares FTSE A50 China Index ETF lost US$585 million last week, the most since 2009, as the Shanghai Composite Index rose to a three-year high.
Investors in the two largest ETFs tracking Chinese shares are retreating after the Shanghai gauge jumped 11 percent in the past month, the top performance among 93 benchmark indices tracked by Bloomberg.
Chinese stocks are valued at the biggest premium over their Hong Kong counterparts in 16 months after China opened up its market with the Shanghai bourse link and the Chinese central bank unexpectedly cut interest rates to combat the weakest expansion since 1990.
“We’ve seen signs of slower economic growth from China in recent weeks,” Todd Rosenbluth, director of mutual-fund research for S&P Capital IQ in New York, said by telephone on Monday. “Investors want to reduce their exposure.”
The Shanghai Composite fell for the first time in eight days yesterday, losing 0.1 percent after a gauge of Chinese manufacturing dropped last month to its lowest level since March.
The stock benchmark advanced 7.9 percent last week, the most since October 2010, after the central bank cut borrowing costs for the first time in two years.
The Shanghai index climbed 3.1 percent at the close yesterday, while the Hang Seng China Enterprises Index of Hong Kong-traded shares gained 2.8 percent.
Overseas investors had used the two Hong Kong-listed ETFs to gain exposure to the Chinese market since April, when the Chinese government unveiled a plan to give anyone with a Hong Kong brokerage account the ability to trade Shanghai shares.
The Shanghai index has gained 28 percent since then, pushing the premium for shares of dual-listed companies to 10 percent over their Hong Kong peers yesterday. That is the biggest gap since July last year and a reversal from four months ago, when Chinese stocks traded at a discount of 11 percent, data compiled by Hang Seng and Bloomberg showed.
Investors started withdrawing money from the two Chinese ETFs in mid-October after adding a combined US$3.5 billion over the previous four months.
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
Nintendo Co is raising its target for Switch production to about 25 million units this fiscal year, people familiar with the matter said, as the ongoing COVID-19 pandemic keeps lifting demand and component shortages ease. The Kyoto, Japan-based company, which in April hiked orders to 22 million units by March next year, is asking partners to tack on another few million units, said the people, who did not want to be identified discussing internal goals. Assembly partners plan to work at maximum capacity through December. The new production target suggests that Nintendo is likely to outperform its Switch sales forecast of 19 million
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US