China-US Trade Hopes Brings Millions Into Vanguard’s Emerging Markets ETF

“Optimism that China-US relations is improving has encouraged investors to add exposure back to China ETFs,” said Todd Rosenbluth, head of research at TMX VettaFi. “Sentiment had been weaker on anticipation of continued tariffs and an escalation of the trade war.”

The recent data marks a shift in flows across China ETFs, following weeks of withdrawals amid uncertainty over the upcoming trade talks between the world’s two biggest economies. Last week, the White House confirmed US President Donald Trump will meet with China’s Xi Jinping on Thursday on the sidelines of the Asia-Pacific Economic Cooperation summit.

It will be their first in-person meeting since Trump’s return to office in January, and comes after weeks of heightened trade hostilities between the US and China.

“Flows data is a great indication of sentiment, so capital inflows would suggest that sentiment is improving,” said Brendan McKenna, an economist at Wells Fargo in New York. “Sentiment can ebb and flow, but at least for now, and especially after the news this weekend, sentiment should be supported.”

More broadly, markets got a boost on Monday after US Treasury Secretary Scott Bessent remarked on Sunday that Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table.” His comments come after two days of talks in Malaysia wrapped up Sunday, with a Chinese official saying the sides reached a preliminary consensus on topics including export controls, fentanyl and shipping levies.

Elsewhere, inflows to US-listed emerging market ETFs that invest across developing nations as well as those that target specific countries totaled $928 million in the week ending Oct. 24, compared with losses of $103.7 million in the previous week, according to data compiled by Bloomberg. So far this year, inflows have totalled $27.1 billion.

• Stock ETFs expanded by $883.8 million.
• Bond funds rose by $44.1 million.
• Total assets rose to $460.4 billion from $451.9 billion.
• The MSCI Emerging Markets Index closed up 2 percent from the previous week at 1,389.39 points, the highest level since June 1, 2021.
• China/Hong Kong had the biggest inflow, of $425.9 million, led by Vanguard FTSE Emerging Markets.
• Mexico had the biggest outflow, of $99.7 million, following withdrawals from iShares MSCI Mexico.

Note: Figures are calculated by country weight using flows to US-listed ETFs. Bloomberg updated the screening criteria in November 2024. Use Bloomberg screening tools to create custom filters.

Following are tables detailing net flows for emerging-market ETFs in US dollars. The data include the holdings-weighted allocations from multi-country funds, as well as country-specific funds. Latest and historic flows are allocated using latest fund weightings (figures in USD millions unless otherwise stated):

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Bloomberg News provided this article. For more articles like this please visit bloomberg.com.

Read more articles by Leda Alvim