The week so far
This week started with Trump threatening China with slapping 25% tariffs on the remaining $300 billion in Chinese exports to the US. He said that the tariffs will come into effect if the deal is not reached by the G20 summit in Japan at the end of this month. China has not confirmed any meeting between Xi Jinping and President Trump. The next day, China’s Foreign Ministry spokesperson, Geng Shuang, said that China is not afraid to fight a trade war and reiterated that it will fight until the end.
With the G20 summit nearing, markets are watching every step from China and reacting to every tweet from Trump. As President Trump turns 73 tomorrow, we can’t help but wish him a deal to ease tensions in the market. We hope that Xi Jinping extends his wishes through a meeting invite.
These days, it’s unusual for Chinese indexes to stay steady. They either move up or down based on the mood swings of the markets (and President Trump). Today was an unusual day. After opening lower and falling to the day’s low in early trade, China’s Shanghai Composite Index recovered by the lunch break. Afterward, it remained in a narrow range to end the day almost flat. The Shenzhen component followed a similar trajectory to end flat.
ETFs and stocks
The iShares MSCI China ETF (MCHI) lost 1.86% yesterday to bring down YTD returns to 8.84%. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR), which has gained 22.64% so far this year, lost 0.96% yesterday. The Internet heavy KraneShares CSI China Internet ETF (KWEB) lost 1.85% yesterday.
Among major Chinese companies listed in the US, Alibaba (BABA) lost 1.6% yesterday. Alibaba was up 0.91% in pre-market trade at 4:45 AM EST. JD.com (JD) lost 2.71% yesterday. JD was up 0.33% in pre-market trade at 4:24 AM EST. Both these stocks are held by the ETFs we have discussed here.