China's Growth Rate Poised for 8.4% Bounce in 2021 | ETF Trends

According to a recent Reuters report, China’s economy will grow at its slowest pace in about 40 years. But given what its economy, and all economies around the world, have been through in 2020, any hint of a recovery is a welcome sign. That said, it should help China-focused exchange-traded funds (ETFs).

“The world’s second-biggest economy is now expected to expand by 2.1% in 2020, according to the median of 37 analysts surveyed by Reuters, down slightly from the 2.2% growth projected in the last poll in July,” the report said. “That would make China the only major economy to grow in 2020, albeit at the slowest annual pace since 1976, the final year of Mao Zedong’s Cultural Revolution.”

Despite a 2020 to forget, China’s economy could actually end the year on a better note than expected.

“The poll forecast fourth-quarter GDP to rise 5.8% year-on-year, quickening from 4.9% in July-September,” the Reuters report added. “Growth is projected to pick up to 8.4% in 2021, as the global economy is set to recover from the health crisis, according to the poll.”

“With exports strong and domestic consumption and investment both improving, Q4 could be one of the best quarters for overall growth in a few years,” analysts at research firm Gavekal Dragonomics said in a note. “Growth momentum should peak in the first half of 2021, though base effects will confuse the data readings.”

Here are a few ETFs that could take advantage of China’s progress:
  • Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond to the CSI 300 Index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market.
  • Xtrackers Harvest CSI 500 China-A Shares Small Cap ETF (ASHS): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 500 Index, which is designed to reflect the price fluctuation and performance of small-cap companies in the China A-Share market and is composed of the 500 smallest and most liquid stocks in the China A-Share market.
  • Xtrackers MSCI China A Inclusion Equity ETF (ASHX): seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI China A Inclusion Index, which is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.

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