(Bloomberg) -- Money managers are piling into exchange-traded funds tracking Chinese stocks after recent government-backed measures boosted market sentiment.

China recorded the biggest inflow across emerging-market countries for the week ended May 17 — of $488 million — led by iShares MSCI China (ticker MCHI). That’s a sharp turnaround for funds with China exposure that saw months of outflows as investors sought strategies excluding the Asian country amid concerns about its economic challenges. 

The weekly influx into such funds was driven by growing optimism that China’s government will take more steps to support its economy, especially on the fiscal side, said Brendan McKenna, emerging-markets FX strategist at Wells Fargo & Co. 

On Monday, Chinese stocks extended gains after Beijing unveiled a policy package to bolster the slumping housing market. The support package announced Friday features a 300 billion yuan ($42 billion) facility from the People’s Bank of China that will fund bank loans for state companies charged with buying up completed-but-unsold housing stock.

“An intervention of this size is not big enough by itself to make a dent in housing supply, but could help lift confidence and stabilize the market,” Chang Shu, chief Asia economist for Bloomberg Economics, wrote in a note Sunday.

Read more: China’s Housing Rescue Too Small to End Crisis, Analysts Say

Better-than-expected economic data — including GDP growth, exports and PMI — as well as policy annoucements to improve the country’s capital markets, are helping fuel renewed optimism for Chinese stocks, according to Ashish Chugh, a portfolio manager and head of global emerging-market equities at Loomis Sayles.

Still, Chugh says the outlook for Chinese stocks is gloomy.

“While this trend could continue in the short-term, we don’t think Chinese equities are attractive over the medium to long term due to significant stress in the real-estate sector — which will take a long time to work out — US-China trade tensions, depressed business confidence due to state intervention in various sectors, and unfavorable long-term demographics,” he said. 

Apart from China, investors chased opportunities in some US-listed emerging-market ETFs that invest across developing nations — as well as those that target specific countries — bringing inflows for the week ended May 17 to $1.24 billion, according to data compiled by Bloomberg. That’s compared with gains of $1.5 billion in the previous week. So far this year, inflows have totalled $6.7 billion.

  • Stock ETFs expanded by $996.4 million.
  • Bond funds rose by $247.7 million.
  • Total assets rose to $354.6 billion from $344.5 billion.
  • The MSCI Emerging Markets Index closed up 2.6 percent from the previous week at 1,099.79 points, the highest level since Apr 18, 2022.
  • China/Hong Kong had the biggest inflow, of $488.3 million, led by iShares MSCI China.
  • No individual country suffered an outflow.

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Following are tables detailing net flows for emerging-market ETFs in US dollars. The data include the holdings-weighted allocations from multi-country funds, as well as country-specific funds. Latest and historic flows are allocated using latest fund weightings (figures in USD millions unless otherwise stated):

Regional Summary

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Asia Pacific

Europe, Middle East & Africa

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