Stock market to ‘nowhere?’ Two ETF experts see more trouble ahead in China

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Done with China?

China may have trouble attracting investors again this year.

ETF Action’s Mike Akins sees challenges tied to the country’s ability to generate stock market returns.

“It’s kind of the old cliché. Fool me once, shame on you. Fool me twice, shame on me,” the firm’s founding partner told CNBC’s ETF Edge this week. “You’ve got this situation where China’s economy expanded. The stock market went nowhere. It’s been very volatile. There’s been periods where it’s gone way up but also come way down.”

According to Atkins, emerging market ex-China products are among the largest inflows ETF Action is seeing.

“You’ve got a whole new issue that you have to think about when going to that market,” he said. “Is it investible from a standpoint of total return? Or is it really a growth story in the economy alone and not in the actual return of the stock market?”

Franklin Templeton Investments’ David Mann cites another issue for investor hesitancy.

“The geopolitical factor with China is certainly on everyone’s mind,” said Mann, the firm’s global head of product and capital markets. “China was down last year. It is down again this year. Investors are probably looking a lot at the political side.”

The Hang Seng Index is down more than 6% this year and almost 30% over the past 52 weeks.

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