China’s ETF Growth Rooted In Strength; Olympics Negligible Economically

Tom Lydon
updated | Author's Website

Investors had long been anticipating the impact of the Olympics upon China’s economy, but after all is said and done, the results may only be negligible, for the country and related exchange traded funds (ETFs).

Chi Lo for Business Week reports that the total Olympics-related spending in the last four years only accounted for an average of 0.3% of China’s total GDP each year.

Beijing would have to be an economic powerhouse for it to influence national economic growth. But as it is, Beijing’s population is only 1.1% of the national total. There has also been no spillover effect on investment outside Beijing.

In better news, though, retail spending in China is expanding at the fastest pace in nine years, and July proved that China’s growth was strong even as prices climbed.

Paul Panckhurst and Nipa Piboontanasawat for Bloomberg reports that sales rose 23.3% to 869.2 billion yuan,($126 billion) after gaining 23% in June. This was more than analysts anticipated.

This is proof of China’s economic strength, even as Japan is facing a recession and global growth is stunted, the growth in China is surging. ETFs that refelct this strength:

  • iShares FTSE/Xinhua China 25 Index (FXI), down 26.9% year-to-date
  • SPDR S&P China (GXC), down 31.3% year-to-date
  • PowerShares Golden Dragon Halter USX China (PGJ), down 31.9% year-to-date
  • NETS Hang Seng China Enterprises Index (SNO), down 18% since May 22 launch

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