China ETFs Advance in U.S. as Economic Woes Ebb Amid Stimulus

  • Bloomberg China ADR gauge rises to highest since July 24
  • Mindray Medical surges to three-month high on buyout bid

Exchange-traded funds tracking Chinese A-shares rallied in New York amid investor optimism that the country’s measures to counter an slowdown are taking hold after data showed signs of economic stabilization.

The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF jumped 4.4 percent to $36.45 in New York, the most since Oct. 15. The Market Vectors ChinaAMC A-Share ETF increased 4.8 percent to $46.28. American depositary receipts of Mindray Medical International Ltd., a medical device maker, surged 7 percent to the highest since August after receiving a buyout offer.

Investors are wagering that policy makers may step up stimulus measures to bolster the economy after President Xi Jinping said late Tuesday that annual growth should be no less than 6.5 percent in the next five years. The Communist Party last week unveiled its five-year plan which includes increasing the yuan’s convertibility in an orderly manner by 2020 and change the way it manages its currency policy.

Better Data

“The economic concerns are starting to decrease,” Michael Wang, a strategist at hedge fund Amiya Capital in London, said by e-mail. “The data in China is looking better, so the sentiment is that we will see growth stabilize in the fourth quarter. The rally can be sustained if we continue to see more positive macro activity data next week.”

The ETFs have each advanced more than 20 percent since their lows in August as the Shanghai Composite Index soared amid government intervention to end a $5 trillion rout and policy makers introduced stimulus to boost economic growth, including a sixth reduction in interest rates in a year. The Bloomberg China-U.S. Equity Index added 0.6 percent on Wednesday, extending a 31 percent rally since the end of September.

A purchasing managers’ index released on Tuesday from Caixin Media and Markit Economics improved to 49.9 in October from 49 in September. China’s survey-based unemployment rate picked up slightly to around 5.2 percent in September, while a ratio of job supply and demand rose in the third quarter.

China is scheduled to report a string of economic data for October starting later this week, which includes trade, inflation, industrial output, retail and property investment next week.

Mindray Medical International surged to $26.62 after it got a takeover bid from Excelsior Union Ltd. and Solid Union Ltd. offering $28 percent per ADR. Mindray became the third Chinese company to announce a go-private agreement this week, bringing the total number of such deals to 35 for the year.

Auto shares rose after major Chinese carmakers Chongqing Changan Automobile Co. and Nissan Motor China Ltd. reported that sales increased in October. Kandi Technologies Group Inc. jumped 5.1 percent to $10.91, the highest since May 11.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE