How China’s Trade War May Impact ETFs

The trade dispute between the United State and China is impacting exchange traded funds (ETFs) that track their markets, with fourth quarter results leaving some investors uncomfortable.

The trade disputes between the United States and China are likely to ripple throughout markets, however, major impacts will be felt in the United States as the supply of cheap goods could drop off. Daniel Harrison for Index Universe explains that investors in China will begin to get squirmy if the dispute worsens, as income from exports won’t hold up as firmly as they did at the start of the year.

Analysts say that China is working overtime to try and stimulate their economy by as much as 30% in an effort to reach an 8% return on GDP growth. The size of its stimulus package has left China wanting income so they don’t get left “holding the bag” someday.

Watch the trend lines as this situation develops, and have an exit strategy if the situation worsens:

• iShares FTSE/Xinhua China 25 Index (FXI): up 51.9% year-to-date

• PowerShares USX Golden Dragon Halter (PGJ): up 61.1% year-to-date

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