3 China-Focused ETFs To Watch As Stronger Manufacturing Data, Stimulus Hopes Boost Sentiment

ETFs with significant exposure to Chinese stocks surged on Monday, as stronger-than-expected manufacturing data and expectations of fresh stimulus from Beijing boosted investor confidence. The gains helped recoup some of last week's losses, which were driven by economic uncertainty and trade tensions between China and the U.S.

Several ETFs tracking Chinese stocks inched up in response to the market rebound.

ETFs To Watch

KraneShares CSI China Internet ETF KWEB Gained 0.6% at 12:51 pm EST as Chinese tech stocks rebounded amid optimism about a consumer demand recovery. Alibaba Group BABA is one of the fund’s top holdings.

GraniteShares 2x Long BABA Daily ETF BABX: Mirrored Alibaba's rebound as investors anticipated stimulus-driven consumer spending growth and gained 2.3% as of 12:51 pm EST.

SPDR S&P China ETF GXC: Gained as investor sentiment improved toward high-growth technology stocks listed on China's Star Market. Alibaba holds one of the premium positions in the fund’s holdings.

Also Read: Alibaba Expands AI Intern Workforce While DeepSeek Slashes Model Prices in Market Battle

Market Rebound Amid Trade War Concerns

Hong Kong's benchmark Hang Seng Index rose 1.2% by lunch break, recovering from Friday's biggest decline in four months, while the Hang Seng Tech Index gained 0.7%. On the mainland, the blue chip CSI300 Index added 0.5%, and the Shanghai Composite Index climbed 0.3%, reversing some of Friday's 2% drop.

The rebound came after both official and private-sector surveys showed China's manufacturing activity expanded at the fastest pace in three months in February. Higher purchase volumes and rising new orders contributed to stronger industrial production, easing investor concerns about the country's economic strength.

Despite the moderate gains, market sentiment remained cautious as both China and the U.S. prepared to impose additional tariffs on each other. President Donald Trump announced an additional 10% tariff on all Chinese imports. In response, China is expected to implement countermeasures, likely targeting American agricultural exports, according to reports from Global Times.

However, analysts at Bank of America noted that these moves are likely negotiation tactics rather than signals of an impending full-scale trade war. “We think these moves are still tactics to put more bargaining chips on the table before negotiations take place,” they wrote in a research note.

Stimulus Expectations

Investors are now closely watching the “Two Sessions” meetings set to begin on Tuesday, where Beijing is expected to announce fresh economic stimulus measures. Policymakers are likely to maintain China's economic growth target at around 5% while outlining a budget deficit of 4% of GDP, according to Bloomberg.

Despite cautious investor expectations regarding the parliamentary meetings, Goldman Sachs analysts highlighted that policy support aimed at boosting domestic demand could lead to further stock market gains. Historically, stimulus measures have disproportionately benefited high-quality, discounted Chinese stocks, making ETFs a preferred vehicle for capitalizing on market shifts.

Alibaba And Blue-Chip Stocks In Focus

Alibaba Group BABA remains a key focus for investors as it represents both China's growing technology sector and consumer spending trends. As economic stimulus measures trickle down, Alibaba and similar blue-chip stocks are poised to be among the first to attract fresh capital.

Also, last week, Alibaba made its video and image-generating AI model, Wan 2.1, publicly available on ModelScope and HuggingFace for academic, research, and commercial use. It has committed $53 billion over three years to enhance its AI and cloud infrastructure. Additionally, Alibaba CEO Eddie Wu met Chongqing's party secretary to discuss potential AI collaborations. These developments have sent Alibaba on a rally.

Investors eager to capitalize on the market’s resurgence may find opportunities in ETFs that provide broad exposure to China's leading companies. However, trade tensions and policy announcements in the coming weeks will likely determine the sustainability of this rebound.

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