China could also have difficulty attracting investors this year.
ETF Action's Mike Akins sees challenges related to the country's ability to generate stock market returns.
“It’s kind of the old cliché. Fool me once, shame on you. Fool me twice, shame on you,” the firm’s founding partner told CNBC’s ETF Edge this week. “There is this situation where China's economy is expanding. The stock market has gone nowhere. He was very volatile. There were phases in which it rose sharply, but also fell sharply.”
According to Atkins, emerging market products (excluding China) are among the largest inflows seen by ETF Action.
“You have a whole new problem to think about when you go into this market,” he said. “Is it investable from a total return perspective? Or is it really just a growth story of just the economy and not the actual return of the stock market?”
David Mann from Franklin Templeton Investments gives another reason for investor reluctance.
“The geopolitical factor with China is certainly on everyone’s mind,” said Mann, the company’s global head of product and capital markets. “China was in the red last year. This year it is in the red again. Investors are probably looking heavily at the political side.”
The Hang Seng Index is down more than 6% this year and nearly 30% over the past 52 weeks.