For Contrarians, 2 ETFs Focusing On China

 | Sep 28, 2021 09:27

Chinese authorities have been cracking down on public companies—a topic we covered (here, here, and here). There has been increased regulatory oversight in diverse sectors, including e-commerce, online gaming, for-profit education, real estate, and tobacco. As a result, a large number of stocks have lost significant value so far in 2021.

For instance, here’s how some of the widely followed stocks have fared year-to-date (YTD):

  • Alibaba (NYSE:BABA) - down 36.2% (YTD);
  • Baidu (NASDAQ:BIDU) - down 27.9% (YTD);
  • Didi Global (NYSE:DIDI)) - down 41.2% since going public in June:
  • NetEase (NASDAQ:NTES) - down 15.1% (YTD);
  • New Oriental Education & Technology (NYSE:EDU) - down 89.7% (YTD);
  • Nio (NYSE:NIO) - down 26.2% (YTD);
  • Pinduoduo (NASDAQ:PDD) - down 46.4% (YTD);
  • Tencent (HK:0700) (OTC:TCEHY) - down 18.1% (YTD).

Meanwhile, there is widespread concern that the leading property developer China Evergrande Group (OTC:EGRNY) could default on debt of $300billion. Fear of contagion has contributed to the recent volatility in global markets.

However, despite the losses in individual shares, the Shenzhen Composite index and the Shanghai Composite index are both up about 3.2% YTD. As a result, some investors wonder whether most of the declines in Chinese stocks could be over, at least for the time being.

Despite numerous question marks, China still has the world’s second-largest economy. Therefore, contrarian investors might find the current risk/reward trade-off favorable. Those readers might want to research the following two exchange-traded funds (ETFs) further.

1. SPDR® S&P® China ETF/h2
  • Current Price: $110.46
  • 52-Week Range: $107.16 - $156.29
  • Dividend Yield: 1.17%
  • Expense Ratio: 0.59% per year


The SPDR® S&P China ETF (NYSE:GXC) invests in a wide range of China-based businesses. The fund gives access to both “China A Shares” as well as companies that trade as American Depositary Receipts (ADRs) in the US.