Many, many investors have learned the hard way about the yen carry trade over the last week. While it may not be the case that AI overvaluation has been the culprit, tech options still struggled as tech felt much of the pain of investors unwinding their carry trades. Amid that drama, however, one underrated equity segment avoided a lot of the pain and could provide value and diversification.
See more: Five Years in, What’s Setting Emerging Markets ETF KEMX Apart?
That underrated equity segment to watch? China equities. While Japan and many parts of Asia’s market took big hits, China has avoided a lot of that pain. Japan and South Korea each may have those major tech names, but in this case, that has seen those two countries experience much more of the pain.
The Yen Carry Trade and You
Intriguingly, while some of the bleak mood saw some China firms drop slightly, too, China tech held on in some cases. Meituan (MPNGY), for example, rose more than 3% from Sunday into Monday, per YCharts. The shopping platform could be set for further positive news should China’s government act to support “service consumption” type firms.
Overall, China represents an underrated equity segment in part due to the continued potential of its sizable consumer base. While not hitting the red hot growth markers of the last decade, its 5% growth outlook could still appeal.
MPNGY could benefit from consumers getting back into a spending mindset, certainly. Other firms like Yum China Holdings (YUMC) are already seeing strong progress. YUMC gained 10.6% after reporting healthy Q2 financial results this week. Furthermore, recent rate cuts from the People’s Bank of China could also boost the case for both further consumer spending and tech growth.
The KraneShares CSI China Internet ETF (KWEB) continues to offer one avenue into some notable China internet firms. As the space remains an underrated equity segment, it could intrigue investors looking to diversify outside of the Japan/U.S. yen carry trade.
For more news, information, and strategy, visit the China Insights Channel.