After becoming the epicenter of the Covid-19 pandemic, China’s economy could be poised for an even stronger rebound following is second-quarter growth. This could give exchange-traded fund (ETF) investors an opportunity to capitalize on further growth prospects in China.

“COVID-19 hit the Chinese economy hard in the first quarter of 2020, causing real GDP to contract by 6.8 percent year on year,” a Channel News Asia report noted. “But since the city of Wuhan emerged from lockdown in early April, the economy has gradually returned to normal, and grew by 3.2 percent in the second quarter.”

Furthermore, the potential for more growth can be had once the economy re-strengthens following the Covid-19 pandemic. Analysts are already forecasting that China’s potential GDP growth could be doubled before the year is over.

“According to the consensus view, China’s current potential GDP growth rate is 6 percent,” the report added. “If it achieves this in the second half of 2020, the economy could post full-year annual growth of 2.5 percent.

^MSCNG Chart

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A China Growth Play to Consider

Investors looking to capitalize on growth opportunities in China can look to the VanEck Vectors China Growth Leaders ETF (GLCN). GLCN seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MarketGrader China All-Cap Growth Leaders Index.

The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index and/or in investments that have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise its benchmark index. The index is comprised of Chinese equity securities which are generally considered by the index provider to exhibit favorable fundamental characteristics according to its proprietary scoring methodology.

For investors looking for additional plays on China, they can give the VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT) a look. CNXT seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the SME-ChiNext 100 Index.

The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index. The index is a modified, free-float adjusted index intended to track the performance of the 100 largest and most liquid stocks listed and trading on the Small and Medium Enterprise (“SME”) Board and the ChiNext Board of the Shenzhen Stock Exchange. The SME-ChiNext Index is comprised of China A-shares.

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