Investors are pouring money into emerging market funds that exclude China after Beijing’s continued crackdown on targeted stocks and sectors, reports the Financial Times. Five prominent EM ex-China exchange traded funds (ETFs) increased by 41% in August to $1.5 billion, bringing their year-to-date growth to 442%, having ended 2020 with $277 million cumulatively.
The jump comes as net inflows into global emerging market ETFs — in which China is by far the largest component — slowed to $696 million in July as Beijing’s regulatory crackdown widened, well below the average of $4 billion in a month in the first half, according to Morningstar data.
Investors are bracing themselves for the next steps in the state clampdown on the private sector, which has already hit the e-commerce, education, fintech, ride-hailing and gaming industries.