Exchange-traded funds that invest in Chinese stocks were trading down Wednesday afternoon, deepening the ETFs’ losses this year after data showed China’s services sector cooled in June and as investors face heightened geopolitical tensions between the country and the U.S.
Shares of the iShares MSCI China ETF MCHI were down 1% on Wednesday afternoon, bringing their year-to-date drop to more than 5%, according to FactSet data, at last check. The KraneShares CSI China Internet ETF KWEB was trading 0.9% lower Wednesday, tumbling more than 9% so far this year, while the Rayliant Quantamental China Equity ETF’s RAYC 1% decline brought its year-to-date drop to more than 10%.
The Caixin China General Services Business Activity Index fell to 53.9 in June, a level the report described as “solid” growth while also saying it was “the softest seen since the current period of expansion began in January.”Meanwhile, investors are navigating increased geopolitical tensions between the U.S. and China.
ETFs that invest more broadly in emerging markets are showing year-to-date gains, particularly those excluding exposure to China.