China slowdown concern spurs record option hedges on ETF

New York

INVESTORS are rushing to buy protection against declines in Chinese stocks amid concern that an economic slowdown will undermine their world-beating rally.

Demand to hedge against future losses on the largest US exchange-traded fund (ETF) tracking China's mainland market climbed to the highest since the ETF was created in November 2013, according to data compiled by Bloomberg. The buying pushed the ratio of bearish to bullish contracts to a five-month high on March 11 as investors pulled US$34 million from the fund in a second week of outflows.