Bulls pile into iShares China Large-Cap ETF despite 18% annual decline

Contrarian flows into FXI highlight a divergence between U.S. equity strength and deepening pessimism on Chinese large-caps, as investors chase potential mean reversion.

By Handelsavisen Newsroom · Automated 2026-07-01 11:19 UTC · 1 min read

Investors are aggressively positioning for a rebound in Chinese equities, driving significant inflows into the iShares China Large-Cap ETF (FXI) even as the fund remains deep in a bear market.

The ETF has declined 18% year-to-date, reflecting persistent headwinds for Chinese large-cap stocks, yet buying interest has surged as traders bet on a valuation floor.

This contrarian move stands in stark contrast to the broader global equity landscape, where U.S. markets continue to rally.

The Nasdaq Composite recently closed its best quarter since 2020, underscoring a widening performance gap between American tech-heavy indices and Chinese equities.

While U.S. investors have benefited from sustained momentum, those targeting FXI are accepting substantial drawdowns in hopes of capturing a reversal.

The shift in capital allocation aligns with broader trends observed in the first half of 2026, where investors poured money into exchange-traded funds at record rates.