Chinese stocks soared in late September on proposals for new economic stimulus, including support for the struggling real estate industry and plans to cut interest rates from the People's Bank of China. The gains continued on Monday, with the CSI 300 index rising more than 8% for its best day since 2008. As a result of that excitement, China ETFs dominate the list of top-performing funds in September, according to FactSet. The iShares MSCI China ETF (MCHI) is up about 22% over the month, while the KraneSharesCSI China Internet ETF (KWEB) is up over 32%. KWEB 1M Mountain KWEB was one of the best performing non-leveraged ETFs in September. Other top-performing stocks include the Global But the Chinese market has experienced explosive excitement in the past, and it hasn't always been kind to investors. China has long underperformed both the U.S. market and some broad measures of global stocks. And the drawdown is especially bad. Since 1992, the MSCI China Index has experienced an average drawdown of nearly 30% each year, more than double the S&P 500, according to Strategas. The total annualized return of the MSCI China Index over this period is less than 1. %. China ETFs appear to be performing even worse on a client cash basis, as investors tend to flock to Chinese stocks when the sector is popular. “China ETFs are one of the few categories, along with long-term bonds (TLT) and long volatility (VXX), that have seen net inflows in excess of current assets under management,” Todd Thorne, ETF strategist at Strategas, wrote in a May note. “It's one,” he said. “Timing is everything when it comes to China allocations. Big gains are usually followed by big declines. The average here is +78% gain in 176 business days, compared to -42% in 165 business days. ,” the memo continued. Indeed, there are some notable believers in this congregation. Hedge fund billionaire David Tepper told CNBC's “Squawk Box” on Thursday that he believes a “total shift” is occurring around China and is buying stocks related to the country. said.
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