The IZZ ETF provides investors with exposure to 50 of the largest companies listed in Hong Kong, tracking the FTSE China 50 Index, with holdings concentrated in China’s leading financial, technology, consumer and internet companies such as Tencent, Alibaba, Xiaomi, China Construction Bank and Meituan. The ETF has advanced almost +16% so far in July, driven by a combination of China tech/chip enthusiasm in the first half of the month and a rotation into consumer, EV, and dividend names in the second half, underpinned by policy support signals from Beijing.
- We see ongoing strength from China’s semiconductors/tech fuelled by President Xi Jinping’s call for accelerated tech self-reliance.
China’s Politburo struck a supportive tone at yesterday’s meeting, pledging to implement “pragmatic and effective” counter-cyclical measures while reaffirming a proactive fiscal policy and moderately accommodative monetary stance. Although no major new stimulus was unveiled, the commitment to support growth was viewed positively by markets, with JPMorgan Asset Management describing the meeting as providing a “constructive backdrop” for Chinese equities in the second half of 2026.
It is worth noting that even after IZZ’s +15.7% July rally, Chinese large-caps remain deeply discounted to US peers from a valuation perspective: Chinese equities continue to trade at a substantial valuation discount to US stocks across every major metric. MSCI China trades on a forward P/E of just 10.8x versus the S&P 500’s 19.4x, a more than 40% discount, while the S&P 500 commands nearly four times the price-to-book multiple.
- We like the risk/reward towards the IZZ ETF from a valuation perspective as it bounces after an almost 30% correction.
MM is bullish towards the IZZ ETF around the $52 level
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