MCHI Soars 45% as Chinese Equities Break Multi-Year Slump

"The iShares MSCI China ETF ( NYSEARCA:MCHI) has climbed 45% over the past year, crushing the S&P 500's 19% gain by more than double. Chinese equities are emerging from a brutal multi-year downturn, and the combination of policy support and stabilizing fundamentals suggests this recovery has room to run. MCHI's $7.7 billion portfolio tracks over 500 Chinese companies, but Tencent dominates with a 17.5% weighting."

"The macro story driving Chinese stocks centers on Beijing's shift toward more aggressive economic support. The government aims to increase household consumption from 40% to 45% of GDP by 2030, a policy shift that would directly benefit internet and consumer holdings. Early evidence suggests the policy is working-retail sales grew 5% in early 2025, validating that stimulus measures are translating into real consumer activity rather than remaining theoretical."

"MCHI's $7.7 billion portfolio tracks over 500 Chinese companies, but Tencent dominates with a 17.5% weighting. This concentration means the fund's performance hinges largely on China's gaming and social media giant, which has rebounded strongly as regulatory pressure eases. The remaining holdings blend traditional state banks with consumer internet disruptors like Meituan and PDD Holdings ( NASDAQ:PDD), creating exposure to both China's old and new economy. The fund charges 0.59% annually."

The iShares MSCI China ETF (NYSEARCA:MCHI) rose 45% over the past year, outperforming the S&P 500's 19% gain. The fund holds over 500 Chinese companies with Tencent comprising a 17.5% weight, making performance sensitive to Tencent's recovery as regulatory pressure eases. Portfolio holdings mix traditional state banks with consumer internet names like Meituan and PDD. Beijing has shifted to more aggressive economic support aimed at raising household consumption from 40% to 45% of GDP by 2030, and retail sales grew 5% in early 2025. Continued consumption strength would validate consumer-exposed stocks, while export weakness could trigger further domestic stimulus as a policy backstop.

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