Changing Consumer Trends Will Continue Driving This ETF

Despite its current challenges with addressing economic growth, China’s consumers continued to spend during the month of August and in the long-term buying trends should help shape opportunities in exchange traded funds (ETFs) like the KraneShares CICC China Consumer Leaders Index ETF (KBUY).

August was a comeback for consumer spending after a lukewarm July reading. This is according to the China Beige Book’s survey of Chinese businesses. China’s economic growth has been tempered with the after-effects of real estate development issues that hit the country a couple of years ago, highlighted by the Evergrande crisis.

The increased spending adds a glimmer of hope that China could eventually bounce back sooner rather than later.

“Coming after months of downward trending figures, even this tiny upshoot of confidence is welcome,” the CKGSB report said.

In the long term, buying trends will also help buoy the consumer spending behavior of Chinese citizens, especially when it comes to current lifestyle trends. Right now, the younger generation is adopting one popular trend: the concept of “China Chic.”

“When we talked about China Chic several years ago, it was just a kind of consumption trend created by brands. However, it has evolved into a cultural phenomenon favored by young people, a group proud of their culture,” said Ji Fangfang, associate professor with the Institute of Journalism and Communication at the Chinese Academy of Social Sciences, in a China Daily article last year.

Get Exposure to Consumer Trends

China’s government is already trying to address economic growth with stimulus measures to get the real estate sector moving forward. If this could also generate growth in the overall economy, consumer spending could also increase. This would pave the way for opportunities in KBUY.

KBUY 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. It focuses on those whose primary business is in the consumption-related industries such as home appliances, food and beverages, apparel and clothing, hotels, restaurants, and duty-free goods.

“KraneShares China Consumer ETF, KBUY, captures the trends of “China Chic” and the growing domestic consumption opportunities,” said Derek Yan, Senior Investment Strategist with KraneShares. “It includes industries like food and beverage, restaurants, apparel, and home appliances. These domestic companies have become so competitive through their innovative design, culturally aligned marketing, and growing e-commerce distribution.”

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