China continues to strive towards self-reliance, and its premier reaffirmed that notion recently. This should give bullish tones for a pair of KraneShares exchange traded funds (ETFs).
Technology has been a recurring theme as the second-largest economy continues to lock horns with the United States. According to a South China Morning Post report, China’s premier visited an up-and-coming chip manufacturer as the semiconductor industry remains at the forefront of this proverbial tech war.
“Li Qiang has called on hi-tech firms to play a greater role in bolstering the country’s technological self-reliance and stabilize its supply and industrial chains, during his latest visit to Chinese manufacturers facing US restrictions,” reported the South China Morning Post.
“Our country’s economy is at a critical juncture in high-quality development. And we must further enhance our confidence in development and maintain our focus on transformation and upgrading,” Li said.
China’s push towards self-reliance has paid dividends on the technology front. A Reuters article earlier this year noted that China is at the top of the heap when it comes to emerging technologies, opening up opportunities in China-focused ETFs.
An ETF Pair to Consider
Given its focus on ramping up its technology sector further, bullish investors can look for an opportunity in the KraneShares Hang Seng TECH Index ETF (KTEC). KTEC offers exposure to Hong Kong internet stocks, e-commerce companies, fintech firms, and other tech-related companies.
KTEC seeks to track the aforementioned Hang Seng TECH Index. The index itself includes the 30 technology companies in Hong Kong’s burgeoning tech sector with the highest free-float market capitalization.
A sub-sector of China’s tech industry is also focused on reducing the country’s carbon footprint. As such, investors can also look for environmental, social, and governance (ESG) opportunities inherent in funds like the KraneShares MSCI China ESG Leaders ETF (KESG).
“Li said the industry should transform into one that concentrates on high-end, intelligent, and green technology, to climb to the top of the industrial chain, innovation chain, and value chain,” the SCMP report added.
KESG seeks to track the MSCI China ESG Leaders 10/40 Index, which is designed to provide exposure to companies with high ESG ratings relative to their sector peers. The index itself consists of large and mid-cap companies in China, and to ensure diversification, the index limits individual constituent weights to 10% and sector weights to 40% of its composition.
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