Ad Banner
Advertisement by Open Privilege
United States

Investors flee China ETFs as US trade war escalates

Image Credits: UnsplashImage Credits: Unsplash
  • Record outflows from US-listed China-focused ETFs hit $3.69B amid escalating US-China trade tensions, with major funds seeing unprecedented withdrawals.
  • Trade war escalates as both nations impose steep new tariffs (125% by China, 145% by the US), raising fears of global economic slowdown and supply chain disruptions.
  • Domestic divergence as mainland Chinese ETFs see $24B in inflows—a record—due to state-backed market support, while policymakers weigh stimulus measures to counter trade war fallout.

[WORLD] Investors are selling exchange-traded funds (ETFs) tracking Chinese stocks at a record pace as the world's largest economies clash in an expanding trade war that threatens global growth. Outflows from US-listed emerging market ETFs that invest across developing nations, as well as those that target individual countries, totaled $5.57 billion in the week ending April 11, the most in a year, according to Bloomberg data.

China accounted for $3.69 billion of the total. Last week, the US$5.6 billion iShares China Large-Cap ETF experienced US$1.2 billion in outflows, while the KraneShares CSI China Internet ETF saw more than US$1 billion in withdrawals and the Xtrackers Harvest CSI 300 China A-Shares ETF saw US$780 million in redemptions. In each case, the outflows were records.

The exodus from China-focused ETFs contrasts sharply with the broader emerging markets landscape, where other regions, such as India and Southeast Asia, have seen relatively stable inflows. Analysts suggest that investors are rotating into markets perceived as less exposed to US-China tensions, though the long-term sustainability of this shift remains uncertain.

Meanwhile, a popular ex-China fund has not received any inflows since September. "The combination of tariff escalation and negative speculative rhetoric around Chinese American Depositary Receipts, or ADRs, led to capitulation on China-specific ETFs last week," stated Malcolm Dorson, senior portfolio manager at Global X Management. "This could continue unless we see the two sides begin to find some common ground," Dorson said.

The sell-off in Chinese ETFs also coincides with a broader reassessment of risk in global markets. The MSCI Emerging Markets Index has fallen nearly 8% since the latest round of tariff threats began, reflecting growing investor caution. Some strategists warn that prolonged outflows could further depress valuations of Chinese equities, particularly in sectors like technology and industrials, which are most vulnerable to trade disruptions.

Trade disputes between the world's largest economies have whipsawed global markets this month, raising concerns about global growth. Beijing countered against Trump's latest tariffs by raising levies on all US goods to 125% last week, calling the administration's actions a "joke". The White House imposed 145% tariffs on Chinese imports.

"If the Trump administration maintains very high tariffs on China, it is clearly negative for China's growth this year and in the medium term," said Michael Hirson, head of China Strategy at 22V Research.

The latest tariff measures have reignited fears of supply chain disruptions, with multinational corporations bracing for higher costs. Companies with significant exposure to China, including Apple and Tesla, have seen their shares under pressure as analysts revise earnings estimates downward. The ripple effects could extend to smaller suppliers and manufacturers across Asia, amplifying the economic fallout.

While China stated that it will not match any future hikes, it underlined its commitment to "fight to the end" with other, undisclosed remedies. The consequences of this developing trade war will most certainly begin to manifest themselves this month.

The intensifying trade war and its possible impact on China's development are creating concerns among investors about what steps policymakers would take to defend the economy. Last week, China's senior officials considered extra economic stimulus in response to Trump's tariffs, which might include steps to increase consumer spending, the birth rate, and export subsidies.

Notably, China’s central bank has already signaled a more accommodative stance, with analysts anticipating further cuts to reserve requirement ratios (RRRs) or interest rates in the coming months. However, such measures may provide only temporary relief, as structural challenges—including slowing domestic demand and a property market downturn—continue to weigh on sentiment.

Still, the quantity and timing of new stimulus have yet to be determined, and worries about whether it will be sufficient to support the Asian nation remain. "Part of the calculation is the need to save policy room for what comes down the road," Mr. Hirson said. Meanwhile, Chinese ETFs traded on the mainland saw about US$24 billion in net inflows last week, breaking the previous record of approximately US$23 billion set in October, as state-backed funds purchased the products to boost the stock market.


Ad Banner
Advertisement by Open Privilege
Middle East
Image Credits: Unsplash
May 2, 2025 at 11:00:00 AM

Israel strikes near Syrian presidential palace in defense of Druze minority

[MIDDLE EAST] Israeli Prime Minister Benjamin Netanyahu confirmed on Friday that Israel carried out an airstrike near the presidential palace in Damascus, reaffirming...

Middle East
Image Credits: Unsplash
May 2, 2025 at 10:30:00 AM

Druze under attack in Syria

[MIDDLE EAST] A series of deadly sectarian clashes south of Damascus has left at least 74 people dead, including members of Syria's Druze...

World
Image Credits: Unsplash
May 2, 2025 at 10:30:00 AM

Nvidia warns US lawmakers about Huawei’s AI chip threat

[WORLD] Nvidia CEO Jensen Huang recently met with members of the U.S. Congress to express concerns about Huawei Technologies’ expanding artificial intelligence capabilities,...

World
Image Credits: Unsplash
May 2, 2025 at 10:30:00 AM

Hong Kong stocks rally on trade and tech optimism

[WORLD] Hong Kong’s stock market rallied on Friday, propelled by renewed optimism over potential US-China trade talks and a powerful surge in US...

World
Image Credits: Unsplash
May 2, 2025 at 10:00:00 AM

Tesla in the crosshairs of global protests

[WORLD] From Australia to Europe and the United States, Tesla has emerged as a lightning rod for protests, with demonstrators criticizing the company...

Malaysia
Image Credits: Unsplash
May 2, 2025 at 10:00:00 AM

Bursa Malaysia dips on pre-weekend profit-taking

[MALAYSIA] Bursa Malaysia's benchmark index, the FTSE Bursa Malaysia KLCI (FBM KLCI), opened lower on Friday, down 2.8 points at 1,537.42, as investors...

Malaysia
Image Credits: Open Privilege
May 2, 2025 at 9:30:00 AM

Ringgit rises slightly as US economic data weakens

[MALAYSIA] The ringgit opened marginally stronger against the US dollar on Friday, trading within a broader range as markets grapple with ongoing global...

World
Image Credits: Unsplash
May 2, 2025 at 9:30:00 AM

China weighs US trade talks amid tariff war pressures

[WORLD] China is considering whether to enter trade negotiations with the United States following recent outreach from Washington, the Ministry of Commerce said...

United States
Image Credits: Unsplash
May 2, 2025 at 9:00:00 AM

U.S. Ukraine minerals pact signals new partnership

[EUROPE] The United States and Ukraine have reached a landmark agreement aimed at boosting Ukraine’s economic recovery and strengthening diplomatic ties. The deal,...

United States
Image Credits: Unsplash
May 2, 2025 at 8:30:00 AM

Tech stocks rise as Apple and Amazon slip

[UNITED STATES] U.S. technology stocks recorded a sharp upswing on Thursday, fueled by better-than-expected earnings from Microsoft and Meta Platforms. However, the momentum...

United States
Image Credits: Unsplash
May 2, 2025 at 7:30:00 AM

US stocks surge on strong tech earnings

[UNITED STATES] US stocks finished higher today, with the S&P 500 and Nasdaq Composite closing in positive territory, as strong earnings reports from...

Singapore
Image Credits: Unsplash
May 2, 2025 at 7:30:00 AM

Singapore developers bet big on Japan’s looming real estate market

[SINGAPORE] Japan is fast becoming the top destination for property developers in Asia, particularly from Singapore, as tourism surges and the yen remains...

Ad Banner
Advertisement by Open Privilege
Load More
Ad Banner
Advertisement by Open Privilege