China Large-Cap ETF: The Three Best and Three Worst Performing Sectors 2

Sector performance

Chinese stock markets have been in a bearish trend in 2017. However, escalation of trade tensions between the United States and China could significantly boost China’s domestic markets.

To understand the sectors in China that have performed best, we studied the portfolio of the iShares China Large-Cap ETF (FXI).

The top three performing sectors are

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  • Real Estate
  • Building Materials
  • Internet

Real Estate stocks make up 7% of the FXI ETF. Year to date, real estate stocks in the FXI portfolio have returned 34%. Stocks in the real estate sector that have generated the highest returns during the year so far are Country Garden Holdings (2007.HK), China Resources (CRBJF), and China Overseas Land (0688.HK). These stocks have surged 82%, 27.6% and 11.9% YTD.

The building materials space consists primarily of cement stocks. These stocks have gained in 2017 due to the revival of the real estate sector. During the year so far, building materials stocks in the FXI ETF have gained 31%. The building materials sector comprises 0.6% of the FXI ETF.

The internet sector constitutes 10.8% of the FXI ETF. Year to date, these stocks have returned an average of 21% in the FXI ETF portfolio. Shares of Tencent Holdings (TCEHY) have driven high returns in this space.

Sectors that have fared poorly during the year are:

  • Oil & Gas
  • Diversified financial services
  • Electricity

The Oil and Gas sector constitutes 13% of the FXI ETF. YTD this sector has 2% and has underperformed broad markets. Stocks like Petro China, CNOOC, and China Petroleum have returned -4.5%, -6.5% and 16.9% respectively YTD.

The diversified financial services sector makes up 3.3% of the FXI portfolio. YTD these stocks have returned 3.8%.

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