MSCI’s Non-China Emerging Markets ETF Bigger Than China ETF For The First Time
(Bloomberg) -- Assets held by MSCI Inc.'s major ETF for emerging markets outside of China have surpassed those of its China fund for the first time, signaling an erosion in the status of Asia's largest economy as the preferred investment destination.
iShares MSCI Emerging Markets ex-China ETF's assets overtook those of the iShares MSCI China ETF on Oct. 20, and have remained that way since, data compiled by Bloomberg show.
The ex-China ETF's market value has surged to $6.8 billion from just $164 million at the end of 2020, while that of China ETF has dropped from a peak in January to about $6.4 billion.
The milestone is another sign of China's waning clout in the global money pool, following record launches of EM ex-China funds this year and a three-month run of foreign fund withdrawals from Chinese stocks.
Doubts over the investability of China have gathered pace as Beijing's efforts to restore confidence have had limited impact, and Western countries led by the US increased oversight of their exposure to the world's second-biggest economy.
MSCI launched its EM ex-China index in 2017, but the strategy took off in the past three years amid Beijing's draconian Covid curbs, an underwhelming reopening recovery and geopolitical tensions with the US. The ex-China gauge is up 29% since its inception compared with little change in MSCI's broadest index of global emerging markets.
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©2023 Bloomberg L.P.
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