China's E-Commerce Dominance Should Buoy This ETF

China continues to work out its real estate issues. But keeping the second largest economy afloat will be a thriving e-commerce business. The majority of the world is struggling with inflation and high interest rates. Yet Chinese consumers continue to spend time shopping online.

“Bolstered by a remarkable 9.9% growth, the Chinese e-commerce market is anticipated to surge to CNY 15.2trn ($2.2trn) in 2023, driven by the ongoing shift of consumer preferences from offline to online shopping, forecasts GlobalData, publishers of EPI,” Electronic Payments International said.

This accelerated with the COVID-19 pandemic. It accelerated again when the company experienced a resurgence in cases last year. Government-mandated social distancing measures forced a vast number of consumers to leverage online shopping to purchase needed and discretionary items.

And even in a post-pandemic world, this trend should persist.

“The Covid-19 pandemic further accelerated e-commerce activities in China, as wary consumers are increasingly using online channels for purchases to avoid getting exposed to disease vectors, a trend that is set to continue,” Electronic Payments International added further.

China’s Big Tech Companies Are Thriving

The proliferation of online shopping could also be enhanced with Web 3 technology. The online shopping experience for consumers could experience vast improvement. That would add to the growing trend even more.

“Web 3.0 technology-enabled industries and innovation are also benefitting from government support and incentives as countries strategically compete to lead the research and development (R&D) landscape powering future infrastructure,” China Briefing reported. “As per Google Trends, the online search interest for Web3/Web 3.0 has surged in recent years, largely in Asian powerhouse economies like China, South Korea, and Singapore. Moreover, data from Baidu, China’s leading search engine, also shows an increase in the popularity of the term.”

These prospects for growth open up avenues for investment in exchange traded funds (ETFs) that can capitalize on the trend. One fund worth noting is the KraneShares CSI China Internet ETF (KWEB).

KWEB measures the performance of publicly traded companies outside of mainland China that operate within China’s internet and internet-related sectors. The fund provides exposure to the Chinese internet equivalents of Google, Facebook, Amazon, and eBay, which includes names like Alibaba Group and Tencent Holdings.

As mentioned, China’s big tech companies thriving is imperative for the country to stave off the effects of its real estate issues. The tech sector should provide a much-needed buoy that can benefit in the short- and long-term investment horizon.

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