If an ASX exchange-traded fund (ETF) rockets 31% over the course of a whole year, it's usually enough for investors to sit up and pay attention. But an ASX ETF that soars 31% in just two weeks? Well, that's something quite special.
That's exactly what investors in the VanEck FTSE China A50 ETF (ASX: CETF) are celebrating right now.
A fortnight ago, CETF units were trading at $46.20 each. Yet today, those same units last went for $60.60, up a whopping 8.95% over Wednesday's session alone. That rise from $46.20 to $60.60 is worth a huge 31.17%.
Funnily enough, these gains put the VanEck China ETF up an uncanny 31.7% year to date as well. Over the past 12 months, investors have banked a more modest 15.1% rise. Check it out for yourself below:
We need look no further to determine the probable cause of this spike in value.
As its name implies, the VanEck FTSE China A50 ETF is an ASX ETF that gives investors exposure to a portfolio containing the largest 50 stocks listed on the Chinese markets. These include names like BYD Co, Kweichow Moutai Co, China Merchants Bank Co, and Industrial & Commercial Bank of China.
In this way, this ASX ETF gives Australian investors a slice of the Chinese markets.
Well, the Chinese markets have had a gangbuster couple of weeks. Back on 24 September, we covered the significant increase in economic stimulus that the People's Bank of China is set to unleash into the Chinese economy.
As we covered at the time, this could reportedly let as much as US$142 billion in liquidity into the Chinese economy.
Chinese stimulus turbocharges this ASX ETF
Investors have been waiting months for fresh Chinese stimulus, given the stagnant nature of the Chinese economy of late. But the scale of what was announced has clearly delighted investors.
One ASX fund manager, Janus Henderson, described the stimulus as a "bazooka". The fund manager told its clients the following:
These measures exceeded the market's expectations, triggering a substantial rally in China's stock markets over the following days…
The latest stimulus package marks a pivotal moment for the country's economic trajectory and equity markets. As global investors seek stability amidst uncertainty, the Chinese government's decisive pivot from debt control to growth support could be the catalyst needed to restore confidence and unlock value in China's markets.
The VanEck China ETF has been a phenomenal performer on the ASX over the past fortnight. But even so, CETF units had still averaged an annual loss of 1.38% per annum over the five years to 31 August. So, let's see if this ASX ETF can turn a page on its longer-term numbers going forward.
