As the Winter Olympics wrap up, China could be preparing to host another international showcase, this time in the global equity arena. With inflation running at a multi-decade high in the US, the Fed has signaled interest rate hikes are on the horizon. China, in contrast, left rates unchanged throughout the pandemic. Now China is charting a new path, cutting key interest rates and introducing policy support for economic expansion. How can advisors potentially benefit from these conditions through China A-share exposure?
In the upcoming webcast, China: The Next Global Equity Boon with Rate Cuts Near?, Brendan Ahern, Chief Investment Officer, KraneShares, will discuss the growth opportunities in China and review targeted fund strategies that can help financial advisors navigate the Chinese markets.
For example, investors can look to several China country-related ETFs to access Chinese equity market exposure, including KraneShares CSI China Internet ETF (KWEB), the KraneShares Electric Vehicles and Future Mobility ETF (NYSE: KARS), the KraneShares MSCI China Clean Technology Index ETF (KGRN), the KraneShares CICC China 5G & Semiconductor Index ETF (KFVG) and the broader KraneShares Bosera MSCI China A-Share ETF (KBA).
KWEB tracks the CSI Overseas China Internet Index, which consists of China-based companies whose primary business or businesses are focused on internet and internet-related technology.
KARS is benchmarked to the Bloomberg Electric Vehicles Index, which provides exposure to companies engaged in producing electric vehicles and/or their components. The Index includes issuers involved in electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead-acid batteries, hydrogen fuel cell manufacturing, and electric infrastructure businesses.
KGRN is benchmarked to the MSCI China IMI Environment 10/40 Index, which provides exposure to Chinese companies that focus on clean technology and contribute to a more environmentally sustainable economy. The Index is comprised of securities that derive at least 50% of their revenues from environmentally beneficial products and services. The Index is based on five key Clean Technology environmental themes: Alternative Energy, Sustainable Water, Green Building, Pollution Prevention, and Energy Efficiency. Constituent selection is based on data from MSCI Environment, Social, and Governance (ESG).
KFVG seeks to measure the performance of the CICC China 5G and Semiconductor Leaders Index. The Index is designed to track the performance of companies engaged in the 5G and semiconductor-related businesses, including 5G equipment, semiconductors, electronic components, and big data centers.
Lastly, KBA is benchmarked to the MSCI China A 50 Connect Index, consisting of 50 large-cap Shanghai and Shenzhen listed stocks (A-shares) available through Stock Connect. This Index offers the first officially recognized Futures contracts for Stock Connect-eligible A-shares, representing a powerful risk management tool for international investors. KA50 will focus on the largest, most liquid stocks, which receive most foreign interest and inflows and may benefit from increased global investment in China’s onshore market over the long term.
Financial advisors who are interested in learning more about China’s market can register for the Thursday, March 10 webcast here.