A funny thing is happening on the way to the Great Selloff of China—some fund investors are beginning to buy China again.
Data from Boston research firm EPFR Global shows investors having put a net of $4.3 billion into China-focused mutual funds and exchange-traded funds, even as mutual fund managers put $4.7 billion of net assets to work in Chinese companies in the week ending July 1. Along with a $635 million increase in positions the prior week, that partially reversed net outflows of $8.4 million for ETFs, and $9.2 billion for mutual fund investments in the two weeks prior.
Chinese markets have been dropping sharply for the last month, with the Shanghai composite index down by a third over the last three weeks and dropping 5.9% today. In the States, analysts argue that Chinese stocks are still expensive, and point out that the surge preceding the recent bust was so large that more than 80 percent of long-focused ETFs focusing on China are still in the black for the year.