Chinese Credit Crisis Fears Pounding China ETFs and ADRs

If you think that the United States is down, the move was even worse in China. Barron’s took its shot at a coming credit crisis in China over the weekend, but what stood out is that this was the Barron’s cover story. The move had Chinese shares handily lower by saying that China’s construction and infrastructure projects put the nation where the U.S. and Japan were before financial calamities.

Barron’s noted, “China’s credit growth to back lavish construction and infrastructure projects is similar to that of the U.S. and Japan before they faced financial calamities.” The fears sent the Shanghai Composite down some 5.3% and the Hang Seng in Hong Kong down by 2.2% on Monday. The move is really hurting exchange traded funds (ETFs) and American depositary receipts (ADRs) trading in the United States, as you might have guessed.

  • iShares FTSE China 25 Index Fund (NYSEMKT: FXI) is down 3.2% at $31.69, against a 52-week range of $31.62 to $41.97.
  • iShares MSCI China Index (NYSEMKT: MCHI) is down 3.3% at $39.24, against a 52-week range of $38.70 to $50.14.
  • iShares MSCI Hong Kong Index (NYSEMKT: EWH) is looking “less bad” because it tracks Hong Kong instead of mainland China, as it is down only 2.2% at $17.94.

The China Fund Inc. (NYSE: CHN) is a closed-end fund and its shares are down 1.7% at $19.20, but shares hit a new 52-week low this morning and the adjusted 52-week range is $19.09 to $24.25. Templeton Dragon Fund Inc. (NYSE: TDF) is another closed-end fund for China, and it is down 2.9% at $23.75, but it also hit a new low and the 52-week range is $23.66 to $30.02.

Now look at the active stocks that trade as ADRs in New York: