BlackRock Said to Shelve China Bond ETF

November 14, 2022

BlackRock Inc., the world’s biggest exchange-traded funds issuer, is shelving a Chinese bond ETF as geopolitical tensions between the U.S. and China surge, the Financial Times reported over the weekend. 

The ETF has been put aside “indefinitely,” two people familiar with the information told the FT, blaming a reversal of the gap in U.S. and Chinese bond yields for the move.  

Frictions between China and the U.S. are on the rise as the world’s two biggest economies are on opposing sides of the Russia’s war with Ukraine war, the U.S. has banned sales of advanced semiconductors and equipment to China, and the U.S. is showing its support for Taiwan as China seeks to reassert control over the nation. 

BlackRock, which manages $2.1 trillion among nearly 400 ETFs, had registered its China Bond ETF with the Securities and Exchange Commission Jan. 27. It was its first Chinese bond ETF for U.S. markets, and would have invested 80% of its assets in government and corporate bonds. 

Still, China’s leader Xi Jinping met U.S. President Joe Biden in Indonesia on Monday for several hours, and the leaders vowed to resume discussions over key global issues. 

The bond fund had been approved by regulators and was intended to be issued in the second quarter of this year. 

BlackRock declined to comment to ETF.com.  

The FT reported that BlackRock also didn’t want to appear to be supporting the Chinese government with U.S. funds. 

BlackRock issued a China bond ETF in Europe several years ago. The iShares China CNY Bond UCITS ETF, with $4.66 billion in assets, has dropped 7.4% this year.  

China’s stocks have declined this year, with the Shanghai Composite Index down 15%. Global inflation, frequent COVID-19 lockdowns and Xi reasserting control over the country’s economy have hurt growth, which is projected to slow next year. 

 

Contact Ron Day at [email protected] 

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