September turned out to be a pretty tough month for most ASX shares. The S&P/ASX 200 Index (ASX: XJO) ended up losing around 2.7% for the month, which is a pretty nasty performance. But one ASX exchange-traded fund (ETF) fared far worse. That would be the BetaShares Asia Technology Tigers ETF (ASX: ASIA).
This ASIA fund has had a month to forget. It started out in September with a unit price of roughly $10.24, and rose all the way to $10.68 early on in the month. But things went from up to down very quickly, and ASIA ended up closing yesterday at $9.80 a unit. That puts its losses for September at 4.3%. From the high of $10.68 on 7 September, the fund had gone backwards by more than 8% by the end of the month.
But it’s not like September was an outlier for this ETF. ASIA has had an extremely tough year in 2021 so far. Year to date, ASIA is now down by more than 16%. And since reaching an all-time high of more than $14 back in February, ASIA is now down more than 31% from those levels.
So what’s gone wrong here, especially over September?
ASIA suffers from China’s Evergrande woes
Well, the answer can perhaps be summed up with one word: Evergrande.
ASIA is an ETF that invests in tech-centred companies from Asia, as its name implies. Currently, its portfolio is weighted by around 45% to China shares. Some of its largest holdings include the Chinese giants Alibaba Group Holding Ltd (NYSE: BABA), Tencent Holdings Ltd (HKG: 0700) and JD.Com Inc (NASDAQ: JD). That’s in addition to other Asian tech giants like Samsung and Taiwan Semiconductor Manufacturing Co Ltd.
Well, if you weren’t aware, the Chinese economy has had one of its worst months in decades in September due to the woes of the giant Chinese property developer Evergrande. Although the crisis at Evergrande seems to be abating (at least for now), this saga sparked many a concern over the current structure of the Chinese economy.
This sparked a crisis of confidence for international investors, and has arguably contributed to a brutal selloff in Chinese equities.
Take Tencent shares, a top ASIA holding. They are still currently down almost 20% year to date, and down almost 40% from the company’s February 52-week high. Alibaba is still down more than 35% in 2021 so far, including an ~11% loss over September alone.
This has been probably the single largest contributor to ASIA’s woeful performance over the month just gone.
The BetaShares Asia Technology Tigers ETF has just over $655 million in assets under management as of 29 September, and charges a management fee of 0.67% per annum.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alibaba Group Holding Ltd. and JD.com. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended JD.com. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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