As we begin the week that ends July, international markets are bracing for economic data and earnings in a difficult macro environment. Asian markets are adding to declines from last week but 3 China funds remain in the upper ranks. GXC, FXI and FCHI rank 4, 2, and 12 in Quant and 1, 2, 3 in the Green Diamond Reward model. China’s Shanghai Composite Index looks ugly for the last couple of weeks but these ETFs sport nice charts leading the US market over the period. The difference is US dollar weakness.
The difference between Quant and the Green Diamond Reward Ratings is the latter model is comprised of Quant’s two dominant categories, Behavioral and Fundamental, while much of the Global Theme and Quality calculations are incorporated in the Red Diamond Risk Ratings. Behavioral is half of the Reward Rating and evenly split between technical and sentiment. All three funds get decent high 60s technical scores with short term leading intermediate and long. FXI has the highest sentiment score of the three at 82.1 but GXC saw its jump from 42.1 on Friday to 72.6 today accounting from heavy put buying. That was enough to steal today’s 10 Green Diamond Rating away from FXI. There are no options available on FCHI so it gets a default 50 put/call score but its short interest and implied volatility are enough to get it a 71.1 sentiment score.
On the Fundamental side, all 3 get high 90s price/cash flow scores where GXC and FCHI are sharing the wealth with 100 yield scores, FXI’s 61.6 yield score means it has had a higher yield about a third of its life. FXI does better on the PE score with 62.4 compared to 56.6 for GXC and 51.6 for FCHI. Price book scores are closer in the low to mid 60s for all 3. The group has above average Red Diamond Risk Ratings in the high 5s with differences resulting from quality metrics as well as differences in country weights (Hong Kong scores higher than mainland China).
Leading the ranks does not mean these 3 funds will be up today or tomorrow but that they are likely to outperform most other funds over the next couple of months. GXC and FXI have ranked highly before and performed very well so we have high hopes this time too. Thanks for checking in to ETF Global® and good luck this week.