Omor Ibne Ehsan
6 min read
Quick Read
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SPY outpaced MCHI by 30 points in 2026, with the S&P 500 up 11% while the China fund sank 18%, marking an all-time record gap.
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Alibaba (BABA) plunged over 6% as investors soured on AI valuations and Beijing disappointed with incremental stimulus and a new offshore trust tax.
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The CSI 300 logged its 11th straight weekly decline, its longest such streak since 2005, with Morgan Stanley warning “weak domestic demand and liquidity headwinds persist.”
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When trading ended on Thursday, October 22, the S&P 500 closed at 2.095 times the Shanghai Composite. By our calculation from daily closes, that is the highest ratio in the data going back to 1997, exceeding the 2.088 record set on September 19, 2024.
The S&P 500’s ratio to Hong Kong’s Hang Seng also closed at a record 0.334, in data back to 1990. Both ratios fell Friday to 2.066 and 0.330 as Shanghai rallied. Even so, the gap hit the widest margin on record during the week ended October 23.
The ETF also hit a record. Measured in dollars with dividends included, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) did so against the iShares MSCI China ETF (NASDAQ:MCHI) on October 22, in data back to 2011. The index ratios compare price levels in local currency. The fund comparison shows what a U.S. investor actually earned.
Investors must judge whether China is a value trap. It could be a market that looks cheap but keeps falling, or a deep discount that Beijing’s state funds have only started to buy.
Through October 23, the S&P 500 has gained 11.4% in 2026. Over the same stretch, the Shanghai Composite fell 7.0%, and the Hang Seng fell 9.9%.
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By our calculation, the S&P 500 is ahead of Shanghai by about 18 percentage points and ahead of MCHI by about 30 points, since MCHI is down 18.4%. The record shows up in the cumulative ratio, which captures years of difference, rather than in any single year.
