iShares China Large-Cap ETF Sees Outflows Amid Emerging Markets Debt ETF Inflows

iShares China Large-Cap ETF Faces Increased Outflows

Investors are pulling funds from the iShares China Large-Cap ETF amidst deepening economic worries in China. With almost US$55 million withdrawn last week, this marks the 11th consecutive week of redemptions. Notably, the KraneShares CSI China Internet Fund (KWEB) experienced its most significant outflow since August 2022, totaling US$238 million, signaling a robust shift in investor sentiment.

Emerging Market Debt ETFs Attract Investments

As the Federal Reserve prepares for potential rate cuts, funds focusing on emerging market debt are witnessing increased investor interest. The iShares JP Morgan USD Emerging Markets Bond ETF (EMB) saw US$238 million in inflows last week, while the Janus Henderson Emerging Markets Debt Hard Currency ETF attracted US$157 million. Brendan McKenna of Wells Fargo notes the altered risk appetite among investors as they seek opportunities outside of China.

Shifting Focus to EM Outside China

• The iShares MSCI Emerging Markets Ex-China ETF (EMXC) reported about US$194 million in inflows.
• Total inflows to US-listed emerging market ETFs reached US$554.7 million last week, reflecting a significant trend shift.
• Federal Reserve's indications of a rate cut have enhanced risk-taking among investors, particularly in the emerging markets.

With ongoing concerns surrounding the Chinese economy and shifting preferences towards emerging market bonds, the landscape for ETFs continues to evolve. Inflows for the year have so far accumulated to US$3.57 billion, showcasing a vibrant interest in these assets amid global economic uncertainties.