The Chinese government has been enacting reforms to shift away from an export model to domestic growth. Investors can capitalize on change through more consumer-oriented China exchange traded funds.
For instance, the Global X China Consumer ETF (NYSEArca: CHIQ) is the only ETF to focus on China’s consumer sectors. CHIQ has a 58.9% tilt toward consumer discretionary and 27.6% position in consumer staples. Additionally, the ETF holds a number of internet e-commerce names, including 5.4% in JD.com (NasdaqGS: JD) and 5.2% in Alibaba Group (NYSE: BABA).
Alternatively, a number of China tech ETFs also include some exposure to a number of consumer-related companies. For example, among their top holdings, KraneShares CSI China Internet Fund (NasdaqGM: KWEB) holds BABA 9.5%, 7.4% CTrip (NasdaqGS: CTRP) and 6.7% JD; Guggenheim China Technology ETF (NYSEArca: CQQQ) includes BABA 8.6% and Lenovo 5.5%; Global X NASDAQ China Technology ETF (NasdaqGM: QQQC), a direct rival to CQQQ, has 7.0% Lenovo.
If the government delivers on its planned reforms, Chinese consumers could spend $67 trillion over the next decade, reports Enda Curran for Bloomberg.
Additionally, the Beijing has nudged its citizens to save less and spend more, shifting the economy away from debt fueled investment toward consumption. While China’s economy has expanded, investment-led growth in GDP has outpaced consumption growth.
“There are signs that the decline in consumption’s share of GDP may have abated, but it has certainly not yet been reversed,” Louise Keely and Brian Anderson of The Demand Institute told Bloomberg.