China is ready to forget 2021’s tech sector regulation and property development crises with a bounce-back in 2022. Global X has a pair of ETFs to consider for investors looking to play the rebound.
One of them, the Global X MSCI China Energy ETF (CHIE), relates to efforts by China to reduce its carbon footprint.
CHIE seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Energy IMI Plus 10/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.
The underlying index tracks the performance of companies in the MSCI China Investable Market Index (the “parent index”) that are classified in the energy sector, as defined by the index provider. CHIE is a possible value play that investors can use as the fund dips below its 50-day moving average.
“China is investing heavily in areas such as solar and electric vehicles as it hopes to dominate not just finished products but also foundational components such as electric-vehicle batteries and polycrystalline silicon, an essential component in solar photovoltaic manufacturing,” a Barron’s article says. “Adding green energy jobs away from the affluent coastal region is also in line with the common prosperity goal.”
Financial Strength in China
CHIX follows the MSCI China Financials 10/50 Index, which provides exposure to large- and mid-cap Chinese financial services firms. The CHIX index “incorporates all eligible securities as per MSCI’s Global Investable Market Index Methodology, including China A, B, and H shares, Red chips, P chips, and foreign listings, among others,” according to Global X.
With CHIX, investors can access financial services sector growth at a discount relative to equivalent domestic ETFs. And with China looking to clean up the financial sector, these growth opportunities could further benefit.
“The ongoing liberalization of China’s capital markets and improved market infrastructure—as evidenced by Bond Connect opening domestic bond markets to international investors and futures trading allowing investors to better hedge A-share exposure—can benefit select financial services companies,” the Barron’s article says further.
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