[Real Estate Tech] Shaking China, Money Flowing into India and Vietnam... Diverging Fortunes of Emerging Market ETFs

Concerns Grow Over Real Estate-Induced Economic Slowdown, Poor Performance of China-Related ETFs
India, Expected to Become World's 3rd Largest Economy, and Vietnam, the World's Factory, Show Strong Growth Prospects

Emerging market exchange-traded funds (ETFs) are gaining attention. Recently, concerns about an economic downturn triggered by China's real estate sector have increased, leading to a rapid inflow of funds into emerging market ETFs. In particular, ETFs related to emerging markets such as Vietnam and India have attracted investor interest by outperforming the KOSPI in terms of returns. In contrast, China ETFs have recorded sluggish returns due to concerns about the economic slowdown.

According to FnGuide, among emerging market ETFs including Vietnam and India, Korea Investment Trust Management's ACE Bloomberg Vietnam VN30 Futures Leverage Securities Listed Index Investment Trust (Equity-Derivative Type) (H) recorded a year-to-date return of 54.50% as of the closing price on the 8th. This significantly outperformed the KOSPI return of 14.47%. The ACE Vietnam VN30 Futures Bloomberg Leverage (H) ETF tracks twice the daily rate of change of the Bloomberg VN30 Futures Index, which is the futures index of the VN30 index.

Following this, Korea Investment Trust Management's ACE Vietnam VN30 Securities Listed Index Investment Trust (Synthetic) posted 28.58%, Mirae Asset Global Investments' TIGER India Leverage Securities Listed Index Investment Trust (Synthetic) 24.58%, TIGER Latin Securities Listed Index Investment Trust (Equity) 18.52%, and Kiwoom Asset Management's KOSEF NIFTY50 India Securities Listed Index Investment Trust (Synthetic) 10.18%.

Additionally, Samsung Asset Management's KODEX India Nifty50 Leverage Securities Listed Index Investment Trust (Synthetic), launched in April, recorded a return of 12.76%, showing generally high returns for emerging market ETFs. The assets under management have also steadily increased. The initial assets for Vietnam and India ETFs were 196.5 billion KRW, but as of the 8th, they increased to 218.6 billion KRW.

China-related ETFs have shown sluggish performance. Since the beginning of the year, the best-performing China stock-related ETF was Samsung Asset Management's KODEX China Metaverse Active Securities Listed Index Investment Trust, which recorded only 4.60%. This was followed by Mirae Asset Global Investments' TIGER China Hang Seng Tech Securities Listed Index Investment Trust (Equity) at 3.85%, and Samsung Asset Management's KODEX China Hang Seng Tech Securities Listed Index Investment Trust (Equity) at 3.83%.

In particular, many ETFs posted negative returns. Shinhan Asset Management's SOL China Solar CSI Securities Listed Index Investment Trust (Synthetic) recorded a return of -25.57%. Following this, Mirae Asset Global Investments' TIGER China Clean Energy SOLACTIVE Securities Listed Index Investment Trust (Equity-Derivative Type) posted -21.30%, TIGER China Electric Vehicle SOLACTIVE Securities Listed Index Investment Trust (Equity-Derivative Type) -19.45%, and Samsung Asset Management's KODEX China H Leverage Securities Listed Index Investment Trust [Equity-Derivative Type] (H) -17.77%. Along with this, assets under management decreased from 5.391 trillion KRW to 4.5265 trillion KRW.

Concerns about the Chinese economy are dragging down the assets under management and returns of China-related ETFs. Following Evergrande Group, Country Garden (Biguiyuan) is also facing a default crisis, continuing fears of an economic downturn triggered by China's real estate sector. Moreover, last month, China's official manufacturing Purchasing Managers' Index (PMI) was recorded at 49.7, falling below 50 for five consecutive months, indicating a continued contraction phase in the economy.

Although the Chinese economy, which had been facing negative factors, has recently shown some rebound, negative views remain. China's consumer price index (CPI) last month rose by 0.1% year-on-year. While this was below the market expectation of 0.2%, it was a rebound compared to a 0.3% decrease in July. Additionally, the Chinese government is pouring out stimulus measures centered on real estate. However, concerns about the Chinese economy persist. Heo Jin-wook, a researcher at Samsung Securities, explained, "Although the Chinese government's real estate measures have expanded to first-tier cities, concerns about the Chinese economy within the financial market continue. This is because cyclical issues such as a slowdown in global trade and structural vulnerabilities like oversupply in real estate are occurring simultaneously, leading to the perception that China's economic conditions are unlikely to improve in the short term."

Unlike China, expectations for economic growth in India and Vietnam remain strong. Accordingly, as funds flow into these countries, returns are also favorable. India is expected to surpass China to become the country with the largest population in the world. In particular, the International Monetary Fund (IMF) forecasts that India will grow at an average rate of 6.1% from this year through 2028. Morgan Stanley also expects India's economy to rank third globally by 2030, following the United States and China.

Vietnam is similar. Vietnam is emerging as a global production base following China. Although recent economic growth has been somewhat sluggish, growth expectations are high as the Vietnamese government is implementing various economic policies. Baek Nam-gyu, a researcher at NH Investment & Securities, explained, "The Vietnamese stock market has outperformed other emerging markets. This is due to earnings surprises from large Vietnamese companies and expanded expectations for economic recovery following stimulus policies."

A representative from an asset management company said, "India and Vietnam have recently benefited from several areas of spillover effects. India continues to grow based on its population of 1.4 billion, and Vietnam is playing the role of the world's factory instead of China, attracting funds from around the world."

This content was produced with the assistance of AI translation services.