Overseas investors are eagerly increasing their exposure to the Chinese market. During the National Day holiday, although the domestic stock market in China was not trading, overseas listed Chinese assets saw significant investments from investors.

According to Morningstar data, as of the week of October 4, assets related to China in exchange-traded funds (ETFs) on U.S. exchanges received a total inflow of $5.2 billion. This optimism represents overseas investors' affirmation of China's stimulus measures introduced in September and also indicates a sharp shift in investor sentiment.

Last year, Chinese-related ETFs listed in the U.S. saw an average weekly outflow of $27 million. So far this year, the average weekly outflow for this category of ETFs has been $83 million.

Michael Reynolds, Deputy Chief Investment Officer of Glenmede Trust, a New York wealth management firm, said that the market has been waiting for China to make credible commitments to economic recovery.

Jonathan Krane, Founder and CEO of KraneShares, pointed out that the Chinese market was previously heavily oversold. He believes that the recent surge in stock prices is just the beginning for the Chinese market, with the current inflows representing only a small portion of global investors returning to China, these are very early reactions.

In addition, short-term option costs for Chinese-related ETFs in the U.S. market soared to new highs on Monday, indicating a strong bullish sentiment among investors towards the Chinese market. Some large traders are rolling profit positions to higher prices, hoping to expand their profits as the uptrend continues.

For example, with a size of $2.3 billion, $Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR.US)$ The implied volatility of one-month options has reached a historical high, with a size of $9.3 billion $iShares China Large-Cap ETF (FXI.US)$ The same indicator has also reached its highest level since 2020, valued at $8.36 billion $KraneShares CSI China Internet ETF (KWEB.US)$ The touched a two-year high.

Sentiment Shift

According to data from Paris-based data analysis company TrackInsight, more than twenty Chinese ETFs listed in the US achieved double-digit returns within a week, with gains ranging between 10-28%, outperforming over 3,000 other ETFs traded in the US market.

The largest china etf in terms of investment scale is blackrock's $iShares China Large-Cap ETF (FXI.US)$ . According to morningstar's statistics, the inflow of funds into the ETF reached as high as $2.7 billion last week.

Michael Barrer, ETF capital markets head at Matthews Asia, stated that when the market experiences such significant and drastic fluctuations, products linked to indices will be the first to see an inflow of funds.

Some U.S. institutions are taking a different approach. U.S. investment advisory firm Roundbill recently launched a fund called $Roundhill China Dragons ETF (DRAG.US)$ , focusing on the 9 largest and most innovative technology companies in China, including $MEITUAN-W (03690.HK)$Please use your Futubull account to access the feature.$XIAOMI-W (01810.HK)$Please use your Futubull account to access the feature.$BYD COMPANY (01211.HK)$Please use your Futubull account to access the feature.$JD.com (JD.US)$Please use your Futubull account to access the feature.$TENCENT (00700.HK)$N/A.$PDD Holdings (PDD.US)$,$Alibaba (BABA.US)$,$Baidu (BIDU.US)$And.$NetEase (NTES.US)$According to the CEO Dave Mazza, the ETF attracted $35 million in net inflows in the first two trading days after the ETF was listed.

Mazza insists that in the near future, the situation will completely change, and China will once again become a country worth investing in globally.

Editor/Rocky