Are Chinese ETFs Like 'CN' Going to Take Off? | ETF Trends

Getting a positive gross domestic product (GDP) reading in 2020 was a tall order for any country. China was able to grow its GDP by 2.3%, a good sign for the Xtrackers MSCI All China Equity ETF (CN).

As noted by a recent CNBC article, China’s “economy grew 2.3% last year as the world struggled to contain the coronavirus pandemic. Gross domestic product rose by 6.5% in the fourth quarter from a year ago, official data from the National Bureau of Statistics showed. Those numbers beat analysts’ expectations.”

Despite the higher GDP, consumers were hesitant when it came to opening their wallets.

“However, Chinese consumers remained reluctant to spend, as retail sales contracted 3.9% for the year. Retail sales for the fourth quarter rose 4.6% from a year ago,” the article added. “Online sales of consumer goods rose at a relatively rapid pace of 14.8% last year, the statistics bureau said, but the proportion of overall retail sales held fairly steady at around one-fourth.”

“Economists expected China to have been the only major economy to grow last year, and predicted GDP in 2020 expanded by just over 2%,” the article noted further. “Those polled by Reuters expected the economy to grow 6.1% in the fourth quarter, faster than the 4.9% pace of the prior quarter.”

CN seeks investment results that correspond to the performance, before fees and expenses, of the MSCI China All Shares Index. The fund will normally invest at least 80% of its total assets in securities of issuers that comprise either directly or indirectly the underlying index or securities with economic characteristics similar to those included in the underlying index.

The underlying index is designed to capture large- and mid-capitalization representation across all China securities listed in Hong Kong, Shanghai, and Shenzhen. CN’s net expense ratio comes in at at 0.50%, while the fund is up 30% within the past year.

CN Chart

The CN ETF: Maintaining Forward Momentum

Investors in CN will want to know if China can maintain its momentum moving forward through the rest of the new year. Technical indicators, namely the relative strength index (RSI) and the corresponding stochastic relative strength index (StochRSI), can help.

The current RSI is hovering just close to overbought levels, and the StochRSI is at 0.784, confirming strong momentum. With China’s economy in full recovery mode, CN is worth a look.

CN Chart

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