Morningstar Rating

ETF Research and Analysis

by Patricia Oey
Suitability
IShares China Large-Cap FXI tracks an index that includes the 25 largest Chinese companies listed in Hong Kong and has significant exposure to state-controlled banks and energy firms. These mega-cap state-run companies   Read more 

Bull Case

FXI invests in some of the largest Chinese companies with substantial economies of scale.
Long-term investors in this fund may benefit from a strengthening Chinese yuan.
The Chinese government is attempting to transition its economy toward a more sustainable growth trajectory--away from capital spending and toward domestic consumption. Read more 

Bear Case

There could be some policy and regulation uncertainty in the near term as the government tries to engineer its economic transition.
The liberalization of interest rates will likely weigh on the margins of the big four banks, which account for about 30% of this fund.
High levels of local government debt, a shadow banking system, and off-balance-sheet bank debt are risks to China's financial system and economy. Read more 

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Craftsmanship Needed for These Investment Styles 
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