The Hang Seng Index has notched its strongest week since 2022, with an 8.80% gain, buoyed by a surge of optimism stemming from several key financial reports. As global investment powerhouses UBS and Goldman Sachs issued positively revised forecasts for the Chinese economy, investors are witnessing renewed vigour in the market.

UBS and Goldman Sachs on China's Prospects

UBS has raised its recommendation on the MSCI China index to overweight in an unusual upgrade call this year, signaling heightened confidence in the region's market prospects. Similarly, Goldman Sachs has expressed a bullish stance on Chinese stocks, raising its forecasts for China's year-on-year economic growth for the first quarter and the full year of 2024 due to the country's manufacturing strength. These endorsements from leading financial institutions could play a pivotal role in reshaping investor sentiment towards the Chinese market.

China-Focused ETFs on the Rise

In alignment with these optimistic economic projections, China-focused ETFs have collectively experienced a significant uplift, climbing 7.8% week-over-week on average, though investment flows have not really reversed yet. Similarly, the FT Wilshire China Large Cap Index has mirrored this positive trend, posting an 8.61% gain.

Spotlight on ETF Performers

At the forefront of this rally, the iShares China Index ETF (XCH) recorded a 7.38% gain, reflecting a shift underway among investors even if persistent risks from geopolitical tensions and potential regulatory backlash have made investors cautious about fully investing in this asset class. The performance of Chinese equities also lifted the overall performance of emerging markets, as evidenced by the gain exhibited by the BMO MSCI Emerging Markets Index ETF (ZEM), which climbed 3.30%.

Group Data

Index Data

Funds Specific Data: XSEM, XEC, ZEM, XEM, XCH, ZCH

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.