MCHI ETF

Trump's re-election and tariffs are major concerns for the iShares MSCI China ETF, despite positive impacts from China's economic stimulus. MCHI's performance is heavily influenced by domestic consumption, with consumer cyclicals making up 31% of the ETF. The ETF responded positively to China's stimulus but negatively to Trump's election anticipation, highlighting the importance of monitoring China's economic data.

China's economy has struggled in recent months amid a depressed level of consumer confidence and a devastating housing bust coupled with weak credit demand. Late in September—just after the U.S. Federal Reserve announced its first federal funds rate cut in several years—the People's Bank of China unveiled a three-part monetary stimulus program to reduce reserve requirement ratios (the amount of cash banks are required to keep on hand), mortgage rates and down payment requirements, and more.

The MCHI ETF provides broad exposure to 85% of China's market cap. Weak economic data has led to the Chinese government announcing massive stimulus plans aimed at boosting investor sentiment and growth. Despite recent rallies, Chinese stocks remain undervalued compared to global markets, supporting a buy rating for MCHI ETF on pullbacks.

The iShares MSCI China ETF (MCHI) has gained nearly 20% this week, bolstered by Beijing announcing significant stimulus measures in recent days to revive the country's economy.

Chinese stocks have been performing poorly, down 43% over the past three years, as measured by the total return on MCHI. Despite being historically inexpensive with a P/E ratio of around 10, MCHI is currently in a steep bear market with poor momentum. MCHI is a large ETF with $4.4 billion in assets under management, featuring a concentrated portfolio and high yield, but with significant risks and bearish seasonal trends.

President Joe Biden's administration has introduced its highly anticipated new tariffs on Chinese electric vehicles and other important products from the country.

President Joe Biden's administration introduced new measures on Wednesday to safeguard American industries and address concerns about China, coinciding with Biden's scheduled address to the United Steelworkers union in Pittsburgh later in the day.

What few fathom, while fearing that China will eclipse the West, is that stocks have been predicting China's descent for far longer, writes Ken Fisher.

Daniel Lam, head of equity strategy at Standard Chartered Wealth Management, shares his views on Chinese stocks and the economy, and discusses the opportunities he sees in the region. He speaks on "Bloomberg Daybreak: Asia.