Exchange traded fund (ETF) investors looking for bounce-back plays might want to take a closer look at China. Along with global inflation, the second-largest economy was racked by a resurgence of COVID-19 cases, but lockdowns are starting to ease.
According to a Bloomberg report, Chinese factories “continued to contract but at a slower pace in May as many of the country’s tightest Covid restrictions began lifting gradually in some areas, indicating the worst of the current economic slump is close to an end.” Additionally, the “official manufacturing purchasing managers index rose to 49.6 from 47.4 in April, according to data released by the National Bureau of Statistics on Tuesday (May 31),” which was slightly higher than the median estimate of 49 expected based on a Bloomberg survey of economists.
Despite these headwinds, consumers must still purchase staple items. As such, one play to consider is the Global X MSCI China Consumer Staples ETF (CHIS), which seeks to provide investment results that correspond to the MSCI China Consumer Staples 10/50 Index. The underlying index tracks the performance of companies in the MSCI China Index (the “parent index”) that are classified in the consumer staples sector, as defined by the index provider.
Overall, CHIS gives investors:
- Targeted exposure: CHIS is a targeted play on the consumer staples sector in China, the world’s second-largest economy by GDP.
- ETF efficiency: In a single trade, CHIS delivers access to dozens of consumer staples companies within the MSCI China Index, providing investors with an efficient vehicle to express a sector view on China.
- All share exposure: The 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.
An Industrial ETF Option
If industrials continue to rebound, then investors may want to also consider the MSCI China Industrials ETF (CHII). The fund seeks to provide investment results that correspond generally to the MSCI China Industrials 10/50 Index, focusing on large- and mid-capitalization segments, while also adding diversification by investing companies that are not just classified as A-shares.
CHII provides investors with:
- Targeted exposure: CHII is a targeted play on the industrials sector in China, the world’s second-largest economy by GDP.
- ETF efficiency: In a single trade, CHII delivers access to dozens of industrials companies within the MSCI China Index, providing investors with an efficient vehicle to express a sector view on China.
- All share exposure: The 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.
For more news, information, and strategy, visit the Thematic Investing Channel.