Funds that focus on Chinese technology companies are bleeding assets. The $1.8 billion KraneShares CSI China Internet Fund, ticker KWEB, saw $95 million exit its coffers last week -- the largest outflow in nearly a year. Two behemoths alone, Tencent Holdings Ltd. and Alibaba Group Holding Ltd., make up roughly a fifth of the ETF.
Broader China-focused funds are also experiencing redemptions. The $4.3 billion iShares MSCI China ETF, ticker MCHI, lost $189 million last week, the most since 2013, while the $5.5 billion iShares China Large-Cap ETF, ticker FXI, is on pace for its worst month of the year.
Hedging Your Tech Bets
While markets have proved fairly resilient since U.S.-China trade talks broke down earlier this month -- the S&P 500 is only about 3% below an all-time high -- the tech-heavy Nasdaq 100 Index has had a rougher time, falling more than 4% over the past two weeks. Losses resumed Monday, with the gauge down 1.4% as of 10:52 a.m. in New York.
That’s left traders hedging their bets. Total open interest, or the amount of both bullish and bearish derivatives contracts that haven’t yet been settled, on the ETF that tracks the Nasdaq 100 (QQQ), rose as high as $8.4 million contracts last week, the highest level of the year.
Bailing On Industrials
Due to the sector’s outsize exposure to China, industrial stocks have taken a beating this month. The S&P 500 Industrials gauge is the third-worst performing this month, with only technology and materials companies faring worse, and ETF investors are taking note. The Industrial Select Sector SPDR Fund, ticker XLI, saw about $500 million in outflows last week, the most this year.
This article was provided by Bloomberg News.