Asia Pacific exchange-traded fund assets fell 3% to US$2.36 trillion in the first quarter on $35 billion of net outflows driven by a record pullout from China funds, according to Morningstar Inc.
It was a turnaround from the $300 billion of net inflows in all of 2025.
“The pullback was driven by heavy redemptions from China-domiciled broad-based equity ETFs, while most other regional markets still attracted inflows,” Jackie Choy, senior principal, global passive investment strategy ratings at Morningstar, says in a report on June 9.
Investors pulled a record 805 billion RMB ($118 billion) from broad-based China ETFs, mainly those managed by state-owned investment firm Central Huijin, amid growing caution about the Chinese economy.
As a result, China ETF assets declined 17.4% to $699 billion versus the fourth quarter of 2025, ceding its position as the largest ETF market in Asia Pacific to Japan, which reclaimed the top spot with $728 billion of assets after losing the position last August.
Meanwhile, according to the report, most ex-China markets saw “notable” pickup of flows into large-cap equity and technology sector ETFs.
This, it says, was especially evident in South Korea and Taiwan where surging prices of tech heavyweight stocks such as Samsung Electronics, SK Hynix and Taiwan Semiconductor Manufacturing Company drove investor interest.
