Chinese ETFs Surge with $2.4 Billion Inflows Amid Optimistic Stimulus Measures

Foreign exchange-traded funds (ETFs) focusing on Chinese equities have witnessed substantial inflows amounting to $2.4 billion in the last three trading sessions of September, driven by aggressive stimulus measures from Beijing. Major ETFs such as the Xtrackers Harvest CSI 300 China A-Shares ETF and iShares Core CSI 300 ETF RMB saw significant investments, propelling the CSI300 blue-chip index to an 8% surge and a 25% rise in five days. Experts like Mark Haefele from UBS suggest further gains are possible with sustained reforms.

Foreign exchange-traded funds (ETFs) focusing on Chinese equities have witnessed substantial inflows amounting to $2.4 billion in the last three trading sessions of September, spurred by aggressive stimulus measures announced by Beijing last week, according to LSEG Lipper data. Previously, these funds saw outflows of $2.7 billion from the start of the year up to September 25.

During these three sessions, the Xtrackers Harvest CSI 300 China A-Shares ETF attracted approximately $518.21 million in inflows, while the iShares Core CSI 300 ETF RMB and the iShares China Large-Cap ETF saw net purchases of $302.3 million and $295.8 million respectively. China's stock markets surged following Beijing's introduction of substantial rate cuts and fiscal support aimed at revitalizing its sluggish economy and boosting the beleaguered market.

The CSI300 blue-chip index surged 8% to its highest level in over a year on Monday, marking a 25% rise in five trading days. This index climbed nearly 21% in September, rebounding from previous declines due to China's struggling economy, which had previously driven investors towards safer assets. Mark Haefele, chief investment officer at UBS Global Wealth Management, noted that while Chinese equities have potential for further gains, sustained reforms will be necessary to maintain this rally.

"We expect significant additional fiscal and monetary support, including 50-100 basis points of cuts to banks' reserve requirement ratio and 20-50 basis points of policy rate cuts by the end of the first half of 2025," Haefele said. "We also anticipate multiple rounds of fiscal stimulus worth 2-5 trillion yuan, focused on affordable housing and investing in social welfare."

(With inputs from agencies.)