China-related exchange-traded funds (ETFs) and shares from Chinese businesses trading on U.S. exchanges suffered a hit on Friday, following disappointment over Beijing's most recent attempt to stimulate their underperforming economy. Reportedly, the Chinese Government announced a five-year plan amounting to 10 trillion yuan ($1.4 trillion) to manage the rapidly growing debt situation of their local governments.
Although Beijing greenlit a proposal allowing these local governments to sell bonds to manage their debts, investors were hoping for a more substantial fiscal support. Investors awaited a greater stimulus from Beijing, especially after the recent election of Donald Trump as the U.S. president, who had promised to increase tariffs on Chinese imports.
“This is not the stimulus that the markets were hoping for,” reported Shehzad Qazi, Managing Director at the China Beige Book, in an interview with CNBC. “This is not a stimulus to begin with. What they're actually doing is debt recycling, which does nothing to stimulate growth.”
Both the iShares MSCI China ETF (MCHI) and the iShares China Large-Cap ETF (FXI) saw a decline of around 6% on Friday.
U.S. traded shares from Chinese conglomerate Alibaba Group Holding (BABA), e-commerce company JD.com (JD), and Temu parent PDD Holdings (PDD) all experienced a drop between 5% and 7%.
Chinese electric vehicle manufacturers Nio (NIO) and Li Auto (LI) also experienced decline in their shares, dropping between 5% and 7%.
*Note: This article was updated on Nov. 8, 2024, to include updated stock prices.