As China Looks to Boost Consumption, Consider This Pair of ETFs

China’s 2023 comeback could be losing steam as the economy struggles with maintaining its rally, but the government is doing what it can in order to keep consumption at an elevated level. Given this, investors may want to consider a pair of exchange traded fund (ETF) options from KraneShares.

From a real estate development crisis to resurging COVID-19 cases, China’s economy has endured growth roadblocks before rallying in recent months. That, however, is in jeopardy as the government looks to stave off negative growth by implementing measures that can bolster consumer purchases.

China’s government is already at work with various agencies individually working to encourage consumers to open their wallets.

“Officials from four other central agencies, including the Ministry of Industry and Information Technology and the Ministry of Culture and Tourism, also said at the press conference that they would roll out specific measures to support their respective industries,” CNN reported, noting that these measures include “increasing consumer loans to encourage car purchases, building more EV charging facilities, building more affordable homes for young people, supporting the consumption of wearable devices and smart products, and encouraging local governments to hold food, music, and sports festivals to attract tourists.”

2 China ETF Options to Ponder

Given the Chinese government’s stimulus measures, one ETF to consider is the KraneShares CICC China Consumer Leaders Index ETF (KBUY), which could see upside if consumer spending increases. The fund seeks to measure the performance of the CICC China Consumer Leaders Index. The index consists of the investable universe of publicly traded China-based companies whose primary business or businesses are in the consumption-related industries such as home appliances, food and beverages, apparel and clothing, hotels, restaurants, and duty-free goods.

With an emphasis on encouraging car purchases and expanding electric vehicle infrastructure, another fund worth noting is the KraneShares Electric Vehicles and Future Mobility ETF (KARS). KARS measures the performance of the Bloomberg Electric Vehicles Index, which includes exposure to electric vehicle manufacturers, electric vehicle components, and batteries. It also includes hydrogen fuel cells and the raw materials utilized in the synthesis of producing parts for EVs.

KARS invests in many familiar car companies such as Tesla, Ford, and Mercedes-Benz, and major Chinese EV manufacturers such as Li Auto, Nio, and BYD. It also goes a step beyond and invests in the companies that contribute to the EV value chain such as companies like Samsung, Panasonic, and lithium manufacturer Albemarle.

For more news, information, and analysis, visit the China Insights Channel.