The horror China ETFs

Simon BrownETF Blog, Latest

I had a look at the chart of the Satrix China ETF (JSE code: STXCHN) and man it is ugly (and below). The Sygnia China ETF (JSE code: SYGCN) looks better but it has been listed for a shorter time so there is less data.

Which China ETF do we prefer?

STXCHN & SYGCN since listing

STXCHN & SYGCN since listing

The issues are many with the latest concern being the recent 20th Communist Party congress. But they predate that as the chart below of the Hang Seng shows it trading back at 2009 levels. Now, this is a Hong Kong based index but the largest constituents include Tencent, Alibaba, Industrial and Commercial Bank of China, Meituan, and the China Construction Bank. All Chinese companies.

But even looking at the two indices used for the local Chinese ETFs they’re at record lows but with shorter time frames as they’re newer indices.

Hang Seng and the indices the above ETFs are tracking

Hang Seng and the indices the above ETFs are tracking

So the question is if China recovers. The answer is yes, but the bigger question is when and by how much?

If you’re holding either of the JSE listed China ETFs the question you have to ask yourself is why? Likely you want some exposure to China and the next question you have to ask is if you still want that exposure.

Personally, I would not. I hold the Top40 ETF so I have lots of exposure to Tencent (China) already and while I agree China will recovery I have no idea about when so would rather sit and watch.

Simon Brown

ETF blog


At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.