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Chinese Financials Continue to Trade in Bearish Zone

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Overview of CHIX

The Global X China Financials ETF (CHIX)(FXI) seeks to track the performance of the Solactive China Financials Total Return Index. This ETF particularly targets the Chinese financial sector, covering 40 stocks across the banking, real estate, and insurance sectors. Its top holdings are China’s largest state-owned banks: China Construction Bank, Bank of China, ICBC, and Agricultural Bank of China. These four stocks make up 33% of its portfolio.

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As of February 19, the ETF has a market capitalization of $15.8 million. Shares of CHIX have plunged 17.4% year-to-date as concerns about the Chinese economy slowing down have led to a flight of capital to developed economies like the United States (SPY) and the Eurozone (FEZ). The largest Chinese ADRs to be listed on the New York Stock Exchange are Alibaba (BABA), China Mobile (CHL), Baidu (BIDU), and PetroChina (PTR).

Moving average analysis

On February 19, CHIX closed at $11.31, 19.6% and 10.5% below its 100-day and 50-day moving averages, respectively. The CHIX ETF crossed above its 20-day moving average on February 17. Technical analysts view such crossovers as a positive sign.

Relative strength index

The 14-day relative strength index (or RSI) for the CHIX ETF is 46.3 as of February 19. This suggests the ETF is still not oversold and could be undervalued. An RSI figure below 30 is an indication of an oversold stock while an RSI above 70 denotes an overbought stock.

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