China-focused exchange-traded funds (ETFs) and stocks of Chinese companies listed in the U.S. suffered a sharp sell-off on Friday, November 8, 2024, after Beijing announced a debt swap stimulus plan that fell short of investors' expectations for broader fiscal support to boost the country's sluggish economy.
The iShares China Large-Cap ETF (FXI), which tracks major Chinese companies, plunged 5.12% in heavy trading as investors reacted to China's unveiled 10 trillion yuan ($1.4 trillion) package aimed at tackling mounting debt levels at local governments. The plan allows local authorities to sell bonds to swap out their debt, but failed to deliver the broader stimulus measures that the market had been anticipating.
According to analysts, the debt swap plan disappointed investors who were eagerly awaiting a more substantial fiscal stimulus from Beijing to revive the country's economic growth amid concerns over slowing demand and lingering trade tensions with the United States.
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