This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Market Vectors China ETF Is Different

Stocks in this article: PEK FXI GXC

Why the discrepancy? Since the beginning of the year, the Chinese government has been hinting at stimulating its local economy. Helping the rising middle class after years of intolerable inflation gives hope to the local population and businesses that can invest on the Shanghai Exchange.

What's more, over the weekend, Premier Wen Jiabao explained that the central government will boost domestic consumption to promote steady and relatively fast economic growth. Wen added that it also intends to implement structural tax reductions to ease companies' financial burdens.

And there's more. China's foreign exchange regulator announced this weekend that it will allow more domestic securities in overseas funds. The demand for access to middle class consumption in China via the country's capital markets should be particularly vibrant at a time when China is turning toward growth/easing/stimulating.

Few investors can get anywhere near China's A shares, and most U.S. ETF investors must rely primarily on funds like iShares China 25 (FXI) and SPDR S&P China.

Because of that, do China's announced policy initiatives still matter for U.S. investors?

Yes. China's progrowth stance that has been years in the making should still be beneficial to all Chinese equities.

Unfortunately, the export-laden GXC and FXI are inexorably tied to Europe. They cannot break free entirely if Europe itself isn't importing Chinese goods or if European banks aren't able to function.

That said, China's commitments will give a boost to the global economy as well as to global confidence. A European "eurobond" solution could see GXC and FXI lead the emerging-market pack out of a two-year downtrend.

And there's still one additional option. Market Vectors China (PEK) offers an indirect way to invest in local Chinese A-shares.

PEK invests in a variety of derivative instruments to gain performance exposure, and it is indeed having some success at doing so.

(Note: Like the Shanghai Index, PEK is up handsomely on the year.)

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets
Jeff Miller
Charles Kirk
On Twitter, Gary Gordon follows:

Jonathan Hoenig
Doug Kass
Hard Assets Investor

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs