Suppose I live in the US and want to buy an ETF share traded in the US. I would already know how Chinese stock market performed by the time the US market is open because of the 12-hour difference.

Let's say it's 1/21/2020 Tuesday in the morning Eastern Time, which is 1/21/2020 Tuesday evening time in China. If Chinese market gained (and suppose the top 50 stocks by market-cap gained) on 1/21/2020, would I gain if I buy an ETF (traded in the US) that tracks an index composed of top 50 Chinese stocks?

If that's case, is this a 100% win situation? If not, why?

Also, because Chinese market is already closed, why does the ETF price sticll change, if the underline index is not supposed to be changing?


  • 1
    "If that's case, is this a 100% win situation?" You can be positive that someone else has already thought of this, and the market has adapted to it.
    – RonJohn
    Commented Jan 19, 2020 at 21:20
  • @RonJohn right, but pre-market trading won't really reflect it 100%, right? Commented Jan 19, 2020 at 21:22
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    If such an arbitrage opportunity did exists, every major player (investment banks, trading desks, market makers, floor traders, etc.) and quants with faster computers, collocation and every other existing advantage would gobble these up before you would even realize the difference in prices. If it sounds too good to be true, it is. And for your dining pleasure, there are no free lunches. Commented Jan 19, 2020 at 21:29
  • "Pre-market trading won't really reflect it 100%, right?" Why wouldn't it? Major traders aren't stupid. They'll base their trading decisions on current data, not on outdated data. So the US opening price will be based on the Chinese closing price, not on the Chinese opening price. Commented Jan 19, 2020 at 22:37
  • @TannerSwett okay, but why do we see the ETF price changes during the day when American market is open while Chinese market is closed (so the underline index is not changing)? Isn't it suppose to track the index? Or are you suggesting the underline index is still chaning when the market is closed? Commented Jan 21, 2020 at 1:33


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