15 May

Shanghai Composite Rebounds Even as Economic Data Disappoint

WRITTEN BY Mayur Sontakke, CFA, FRM

Chinese stocks gain

Markets eased today as President Donald Trump called the US-China trade war “a little squabble” and tweeted that the deal would happen “much faster than people think.” The hope that China may boost the slowing economy with a fresh fiscal stimulus also pushed the markets up.

China’s Shanghai Composite Index rose 1.91% to 2,938.68 on May 15. The index opened higher today and maintained upward momentum during the day following the 0.8% gain in the S&P 500 (SPY) on May 14.

Shanghai Composite Rebounds Even as Economic Data Disappoint

Economic data disappoint

While the indexes rose, China’s economic data disappointed analysts on May 15.

China’s industrial production growth dropped to 5.4% in April, lower than the expected 6.5% and even lower than March’s 8.5%. Its retail sales growth dropped to 7.2% in April compared to 8.7% in March. Its retail sales growth was also lower than the expected 8.6%.

Growth in fixed investments dropped to 6.1% in April compared to 6.3% in March. The expectation had been 6.4%.

ETFs

We’d expected a rebound in ETF prices on May 14 even as the Shanghai Composite Index fell marginally.

The iShares MSCI China ETF (MCHI) gained 1.68% on May 14, outperforming US and Chinese indexes. Meanwhile, the iShares China Large Cap ETF (FXI) gained 1.6%. It was up 0.68% in premarket hours as of 4:43 AM EDT.

The technology-focused KraneShares CSI China Internet ETF (KWEB) gained 2.21% yesterday during US trading hours.

The XTrackers Harvest CSI 300 China A-Shares ETF (ASHR) was the best-performing major China-focused ETF on May 14 with a 3.04% gain. The ETF was up 1.25% in premarket trading at 4:18 AM EDT.

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