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Global X MSCI China ETF

3040.HK:HKEX

equity ETF | passive | Mirae Asset Global Investments (Hong Kong) Limited | Tracks MSCI

Market Price

HK$38.68 (26 Jan 2026)

+38.76% (YoY)

NAV

HK$38.52

+0.42% Premium

Yield

0.00%

Expense Ratio

18.00%

-60% vs Avg: 45.00%

Box Set (ETF)

⚡ Executive Summary

📊 The Bottom Line

This ETF tracks the MSCI China Index, offering broad exposure to over 600 Chinese companies listed across Hong Kong, China A, and US markets. It is a highly cost-efficient way to access the China equity market, boasting one of the lowest expense ratios in its category. Bull case projections suggest NAV could reach HK$46.42 (+20%) within 12-18 months, while the bear case indicates a potential decline to HK$30.94 (-20%).

⚖️ Risk vs Reward

The underlying Chinese equity holdings currently trade at an undemanding valuation compared to their historical averages and other emerging markets, presenting a compelling risk-reward profile. The sector has benefited from recent policy stimulus and improving corporate earnings, with strong free cash flow generation from major internet platforms. However, investors face inherent emerging market risks including regulatory uncertainty, political shifts, and potential liquidity issues. While the market has seen positive momentum, concentration risk within key sectors and companies could amplify downside if sentiment sours. The potential upside of 20% is balanced against a similar downside, suggesting a moderately positive outlook driven by domestic recovery.

🚀 Why 3040.HK Could Soar

• Continued Chinese policy stimulus and economic recovery could drive a re-rating of the underlying assets, potentially boosting NAV by 15-20% over 12-18 months.
• Undemanding valuations, with the MSCI China Index trading at a discount to its historical average and other emerging markets, offers significant room for multiple expansion.
• Solid earnings growth and increasing shareholder returns from major internet platforms, which form a significant portion of the index, can act as strong catalysts for performance.

⚠️ What Could Go Wrong

• Increased regulatory scrutiny, geopolitical tensions, or unexpected policy shifts in China could lead to market instability and a 15-20% drawdown in NAV.
• Persistent weakness in China's property sector or slower-than-expected consumption recovery could dampen corporate earnings and investor sentiment, impacting performance by 10-15%.
• Concentration risk within certain sectors and large-cap companies means that adverse developments in a few key holdings could have a disproportionate negative impact on the ETF.

🏢 Fund Overview

What Are You Actually Buying

The Global X MSCI China ETF provides broad-based exposure to the China equity market, encompassing a diversified basket of over 600 Chinese companies listed on stock exchanges in Hong Kong, Mainland China A-shares, and the United States.
The ETF targets large and mid-cap segments of the Chinese market, as represented by the MSCI China Index, including both state-owned enterprises and privately-held companies across various sectors.
China's equity market is characterized by rapid growth potential, evolving regulatory environments, and a significant role for government policy in economic direction, offering unique investment opportunities and risks.
This exposure allows investors to participate in China's economic development, benefiting from trends in consumption, technology, and industrial upgrading, while navigating a market that can exhibit higher volatility than developed markets.

Market Dynamics & Outlook

The Chinese equity market is currently supported by unprecedented monetary and fiscal policy stimulus aimed at boosting the real economy, with further policy rollouts expected to support consumption and the property sector.
Valuations for the MSCI China Index remain undemanding, trading at a discount compared to other emerging markets and its own historical levels, suggesting potential for re-rating.
Major internet platforms within the index are delivering solid earnings through cost optimization and quality-focused growth strategies, actively returning cash to investors via share repurchases and dividends.
The electric vehicle (EV) sector in China continues to show strong sales momentum, with penetration close to 50%, alongside an improving supply-demand dynamic in the battery sector that could support recovery.

🎯 Why This Matters

Understanding the current dynamics of the China equity market is crucial as it balances significant government stimulus and attractive valuations against inherent emerging market risks. The ETF offers a diversified avenue to participate in China's ongoing economic transformation, making its current positioning vital for assessing future returns and potential volatilities.

📈 Valuation & Analysis

Historical Performance

YTD

+4.08%

+30.05%

Yearly Growth (3Y)

+18.57%

Yearly Growth (5Y)

+0.13%

Yearly Growth (Since Inception)

+6.10%

Current Valuation

The underlying holdings of the Global X MSCI China ETF, as reflected by the MSCI China Index, currently trade at a weighted average price-to-earnings (P/E) ratio of 13.92x and a price-to-book (P/B) ratio of 1.57x. The index offers a dividend yield of 2.57%. These metrics indicate that the market is pricing Chinese equities at a discount relative to peer China A-share indexes and their own historical valuations, despite a solid growth outlook. This suggests a potentially 'undemanding valuation' environment where current prices may not fully reflect the intrinsic value or future growth prospects of the underlying companies, offering an attractive entry point for long-term investors.

The Bull Case - Upside to

Robust Policy Support Fuels Recovery

Medium Probability

Aggressive monetary and fiscal stimulus from the Chinese government, coupled with targeted policies for consumption and property, could accelerate economic recovery, driving a 15-20% appreciation in underlying asset values.

Attractive Valuations Drive Multiple Expansion

Medium Probability

The current discount of the MSCI China Index relative to its historical valuation and other emerging markets could lead to significant multiple expansion, translating to a 15-20% upside as investor confidence returns.

Strong Corporate Earnings and Shareholder Returns

High Probability

Major internet platforms and other large-cap companies are demonstrating solid earnings growth and increasing shareholder returns through buybacks and dividends, which could collectively boost the index by 10-15%.

The Bear Case - Downside to

Heightened Geopolitical and Regulatory Risks

Medium Probability

Escalating geopolitical tensions or unexpected shifts in regulatory policy could deter foreign investment and lead to a significant valuation compression, causing a 15-20% decline in the ETF's NAV.

Persistent Property Sector Weakness

Medium Probability

Failure to stabilize the property market or a prolonged downturn in consumption could hinder broader economic recovery, resulting in a 10-15% earnings downgrade for underlying companies and impacting the ETF.

Emerging Market Volatility and Liquidity Concerns

High Probability

Chinese equities, as an emerging market asset, are prone to higher volatility, liquidity risks, and currency fluctuations, which could trigger sharp sell-offs and a 10-15% drop during periods of global risk aversion.

Risk/Reward Assessment

The Global X MSCI China ETF presents a nuanced risk-reward profile, with considerable upside potential driven by China's concerted efforts to stimulate its economy and the attractive valuations of its underlying assets. The possibility of robust earnings from its technology and consumer discretionary holdings further supports a positive outlook, potentially leading to a 20% NAV appreciation. However, these opportunities are counterbalanced by significant risks inherent in an emerging market, particularly around regulatory unpredictability and geopolitical tensions, which could trigger a 20% drawdown. The concentration of the ETF's holdings in certain sectors and mega-cap companies amplifies both potential gains and losses. Investors should weigh the compelling growth narrative against the higher volatility and specific market risks associated with Chinese equities, suggesting a long-term horizon is prudent to ride out potential short-term fluctuations.

Peer Comparison

The Global X MSCI China ETF (3040.HK) distinguishes itself with a highly competitive expense ratio, offering broad exposure to the Chinese equity market at a lower cost compared to many peers. Its passive strategy aims for tight tracking of the MSCI China Index, appealing to investors seeking benchmark-like returns with minimal leakage to fees. While some peers might offer more specialized exposure (e.g., technology or high dividend focus), 3040.HK provides a diversified core allocation to China, encompassing a wide range of industries and listing venues. This makes it a suitable option for investors looking for comprehensive China market access without the higher costs often associated with thematic or actively managed funds. The trade-off is that it may not capture outsized gains from specific niches as much as a more concentrated ETF, but it mitigates single-sector risk.

Fund	Expense Ratio	AUM (B)	1Y Return	3Y Return	5Y Return	Yield
Global X MSCI China ETF (3040.HK) ⭐	18.00%	HK$5.3B	30.05%	18.57%	0.13%	2.45%
Global X Hang Seng High Dividend Yield ETF (3110.HK)	68.00%	HK$5.1B	N/A	N/A	N/A	8.00%
Global X Hang Seng TECH ETF (2837.HK)	44.00%	N/A	N/A	N/A	N/A	N/A

🎯 Why This Matters

The valuation analysis highlights that Chinese equities, as accessed through this ETF, offer a blend of growth potential and attractive valuations, particularly in light of ongoing policy support. For investors, this implies a potential sweet spot for long-term growth, but also underscores the necessity of a patient approach given the inherent volatility and risks of the market. The ETF's cost efficiency is a significant advantage that can compound returns over time, making it a strong contender for core China exposure.

📊 Appendix

Top 10 Holdings (80+ of ETF Value)

#	Ticker	Logo	Name	Sector	Weight
1	700.HK	T	Tencent Holdings Ltd	Communication Services	16.6%
2	9988.HK	A	Alibaba Group Holding Ltd	Consumer Cyclical	12.6%
3	939.HK	C	China Construction Bank Corporation	Financials	3.2%
4	PDD.US	P	PDD Holdings Inc	Consumer Cyclical	3.1%
5	1810.HK	X	Xiaomi Corp-Class B	Technology	2.7%
6	3690.HK	M	Meituan Class B	Consumer Cyclical	2.2%
7	9999.HK	N	Netease Inc	Communication Services	1.8%
8	1211.HK	B	BYD Company Limited Class H	Consumer Cyclical	1.7%
9	1398.HK	I	Industrial and Commercial Bank of China Limited Class H	Financials	1.6%
10	9961.HK	T	Trip.com Group Ltd	Consumer Cyclical	1.6%

Fund Mechanics

How It Works

The Global X MSCI China ETF (3040.HK) is a passively managed exchange-traded fund designed to provide investment results that closely correspond to the performance of the MSCI China Index, before fees and expenses. The index comprises large and mid-capitalization Chinese equities listed across various global exchanges, including Hong Kong, Shanghai, Shenzhen (A-shares accessible via Stock Connect), and the United States. The fund's investment strategy involves replicating the index by investing in the stocks of companies according to their weightings in the index, offering broad exposure to the diversified Chinese equity market. Rebalancing and reconstitution rules follow the MSCI China Index methodology, ensuring the portfolio remains aligned with its benchmark.

Holdings Breakdown

Number of Holdings

554

Top 10 Concentration

4708.0%

Category	Weight	Description
Consumer Discretionary	30.2%
Communication Services	19.7%
Financials	15.7%
Information Technology	6.6%
Health Care	4.9%
Industrials	4.3%
Materials	3.5%
Consumer Staples	3.3%
Energy	2.2%
Utilities	1.7%
Real Estate	1.6%
Cash	0.2%

Cost Efficiency

Expense Ratio

18.00%

Metric	1 Year	3 Year	5 Year
Tracking Error	25.00%	N/A	N/A
Tracking Difference	-6.00%	N/A	N/A

Performance History

Year	ETF Return	Benchmark Return	Tracking Diff	Volatility	Max Drawdown	Sharpe Ratio
2022	-21.86%	-21.84%	-0.02%	N/A	N/A	N/A
2021	-21.30%	-21.66%	0.36%	N/A	N/A	N/A
2020	27.62%	28.10%	-0.48%	N/A	N/A	N/A
2019	22.30%	23.07%	-0.77%	N/A	N/A	N/A
2018	-18.68%	-18.71%	0.03%	N/A	N/A	N/A

Annualized Return Since Inception

6.10%

Detailed Peer Comparison

Ticker	Name	Issuer	Exp Ratio	AUM (B)	1Y	3Y	5Y	Yield	StdDev 3Y	Sharpe 3Y	Spread
3040.HK ⭐	Global X MSCI China ETF	Mirae Asset Global Investments (Hong Kong) Limited	18.00%	HK$5.3B	30.1%	18.6%	0.1%	2.45%	22.01%	0.00	N/A
3110.HK	Global X Hang Seng High Dividend Yield ETF	Mirae Asset Global Investments (Hong Kong) Limited	68.00%	HK$5.1B	N/A	N/A	N/A	8.00%	N/A	N/A	N/A
2837.HK	Global X Hang Seng TECH ETF	Mirae Asset Global Investments (Hong Kong) Limited	44.00%	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Category Average			45.00%	—	N/A	N/A	N/A	N/A	—	N/A	—

Risk Metrics

Standard Deviation

1 Year	3 Years	5 Years	10 Years
N/A	22.01%	N/A	N/A

Sharpe Ratio

1Y	3Y	5Y	10Y
N/A	0.00	N/A	N/A

Sortino Ratio

3 Years	5 Years
N/A	N/A

Maximum Drawdown

1 Year	3 Years	5 Years	Since Inception
N/A	N/A	N/A	N/A

Correlations

Liquidity & Trading

Volume

Avg Daily Shares

9,251

Avg Daily Dollar Volume

HK$0.4M

Trend

stable

Bid-Ask Spread

Metric	Value
Median (Percent)	N/A
Median (Dollar)	N/A
During Hours	N/A
At Close	N/A
Volatility	low

Premium/Discount to NAV

Metric	Value
Current	42.00%
30-Day Average	N/A
1-Year Average	N/A
Standard Deviation	N/A
Max Premium (1Y)	N/A
Max Discount (1Y)	N/A

Creation/Redemption Activity

Trend

null

Net Flows

Period	Net Flow

⚠️ Disclaimer: This ETF research report is for informational and educational purposes only. It does not constitute investment advice, a recommendation, or an offer to buy or sell securities. EC² Invest is not a registered investment advisor. All data is sourced from public sources and may contain errors. Past performance does not guarantee future results. ETF investing involves risk, including possible loss of principal. Always conduct your own research and consult with a qualified financial professional before making investment decisions.