Shanghai vs FXI
US investors looking for exposure to Chinese equities generally go to the iShares FTSE/Xinhua China 25 ETF -- FXI. While it doesn't directly track China's most popular equity index -- the Shanghai Composite -- the two are pretty highly correlated. Below we highlight the return of the Shanghai Composite and FXI since FXI began trading in October 2004. As shown, FXI is currently up 161.24% versus the Shanghai Composite's return of 115.92%. FXI investors have actually done much better holding the ETF than they would have if they invested directly in the Shanghai Composite.
On another note, we found that the correlation between the one-day percent change of the Shanghai Composite and the open to close percent change of the FXI ETF has been -0.02 throughout FXI's history. This means that there are no trading opportunities for US investors who want to buy or sell FXI at the open when the Chinese markets are up or down big prior to the open here in the US.
FXI tracks the Hang Seng H shares known as the Hang Seng China Enterprise Index. It does not track SSEC at all. It's a completely different index. It's kind of like comparing the S&P and the Dow. Close, but not a 1:1 correlation. FYI...
Posted by: Cullen | June 10, 2008 at 10:37 PM