Investors plowed cash into China-focused exchange-traded funds at the fastest pace in over a year last week amid easing trade tensions between the world’s two largest economies and the broader rally across artificial intelligence stocks.
The $7.3 billion KraneShares CSI China Internet Fund, known by the ticker KWEB, recorded $754 million in fresh cash last week, its biggest weekly inflow since October 2024. On Friday alone, the fund garnered $361 million following a highly anticipated meeting between US President Donald Trump and his Chinese counterpart President Xi Jinping.
“Investors have shown renewed interest in Chinese tech ETFs,” said Roxanna Islam, head of sector and industry research at ETF shop TMX VettaFi. “KWEB, in particular, has offered investors an opportunity to add exposure to the broader global AI theme after its strong pullback this year.”
Over the weekend, China’s Ministry of Commerce had said Beijing and Washington will adopt a series of measures, including mutually cutting levies on certain products, to expand bilateral trade in areas such as agriculture.
“The Trump-Xi summit gives China equities a more constructive tone, even before investors see any concrete policy relief,” Bloomberg Intelligence strategists Marvin M Chen and Jason Liao wrote in a note.
On May 14, Reuters reported that the US has cleared around 10 Chinese companies to buy Nvidia’s H200 AI chips, including Alibaba, Tencent, ByteDance and JD.com. Alibaba, which represents KWEB’s biggest holding, rallied that day following the report.
The recent inflows could also show investors “balancing out the extremes between different tech sectors,” according to Todd Sohn, chief ETF strategist at Strategas Securities.
South Korea, for instance, attracted strong inflows earlier this year, led by SK Hynix Inc and Samsung Electronics Co Ltd. But last week, South Korea’s ETF had the biggest outflow, totalling $318.5 million, following withdrawals from iShares MSCI South Korea.
“Recent inflows reflect no negative news between the Trump/Xi meeting and investors taking profits in Korea and Taiwan,” said Malcolm Dorson, a senior portfolio manager at Global X Management Co.
Still, uncertainties remain. Recent economic data showed that China’s growth slowed across the board in April with investment resuming declines.
Elsewhere, inflows to US-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $1.08 billion in the week ended May 15, compared with gains of $27.6 million in the previous week, according to data compiled by Bloomberg. So far this year, inflows have totalled $43.8 billion.
Note: Figures are calculated by country weight using flows to US-listed ETFs. Bloomberg updated the screening criteria in November 2024. Use Bloomberg screening tools to create custom filters.
Following are tables detailing net flows for emerging-market ETFs in US dollars. The data include the holdings-weighted allocations from multi-country funds, as well as country-specific funds. Latest and historic flows are allocated using latest fund weightings (figures in USD millions unless otherwise stated):
| Region | Flow Week | Equity Flow | Bond Flow | Total Assets (USD Bln) |
|---|---|---|---|---|
| Total EM | 1,082.1 | 1,166.4 | -84.2 | 547.7 |
| Americas | -162.0 | -119.5 | -42.5 | 64.9 |
| Asia Pac | 1,285.3 | 1,291.3 | -6.1 | 448.1 |
| EMEA | -41.2 | -5.5 | -35.7 | 34.7 |
| Country | Flow Week | Equity Flow | Bond Flow | Total Assets |
|---|---|---|---|---|
| Venezuela | 0.5 | 0.0 | 0.5 | 33.8 |
| Ecuador | -3.7 | 0.0 | -3.7 | 373.6 |
| Chile | -8.3 | -1.8 | -6.4 | 5,413.7 |
| Colombia | -10.1 | -4.1 | -6.0 | 2,105.7 |
| Peru | -16.1 | -10.2 | -5.9 | 2,314.0 |
| Argentina | -21.4 | -15.8 | -5.6 | 1,693.9 |
| Mexico | -25.5 | -16.2 | -9.3 | 15,392.5 |
| Brazil | -77.4 | -71.4 | -6.1 | 37,589.2 |
| Country | Flow Week | Equity Flow | Bond Flow | Total Assets |
|---|---|---|---|---|
| China/Hong Kong | 1,216.1 | 1,216.9 | -0.8 | 134,071.1 |
| Taiwan | 362.5 | 362.5 | 0.0 | 140,068.6 |
| India | 19.0 | 19.0 | -0.1 | 76,818.1 |
| Malaysia | 8.6 | 11.6 | -3.0 | 8,729.3 |
| Kazakhstan | -2.4 | 0.1 | -2.5 | 286.5 |
| South Korea | -318.5 | -318.8 | 0.3 | 88,157.1 |
| Country | Flow Week | Equity Flow | Bond Flow | Total Assets |
|---|---|---|---|---|
| Greece | 3.4 | 3.4 | 0.0 | 2,672.7 |
| Russia | 0.0 | 0.0 | 0.0 | 0.1 |
| Morocco | -1.4 | -0.2 | -1.1 | 203.3 |
| Poland | -2.9 | 3.8 | -6.7 | 6,040.6 |
| Hungary | -5.7 | 1.1 | -6.8 | 2,679.6 |
| Romania | -6.6 | 0.0 | -6.6 | 1,137.4 |
| South Africa | -11.1 | -5.0 | -6.1 | 16,279.6 |
| Turkey | -17.0 | -8.5 | -8.4 | 5,689.3 |
Written by: Leda Alvim and Gabriel Diniz Tavares @Bloomberg
The post “Investors Add Exposure to China ETFs After Trump-Xi Meeting” first appeared on Bloomberg
