China ETF 'CHIQ' Up 25.52% YTD | ETF Trends

Plenty of data points augur well for companies with exposure to e-commerce and online retail. Financial markets are reflecting those expectations, but investors should be careful to note the online retail boom is not confined to the U.S.

Take the case of the Global X MSCI China Consumer Discretionary ETF (CHIQ). Up 25.52% year-to-date as of Friday, CHIQ was one of the best-performing China ETFs in the first quarter.

CHIQ’s underlying 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.

Remember that China, not the U.S., is the world’s largest Internet market, meaning the former is also home to massive e-commerce market. Data confirm as much.

“Online retail sales in China exceeded ¥9trn in 2018, topping the world for the sixth consecutive year, spokesperson Gao Feng said during a regular conference of the Ministry of Commerce (MoC) on 21 March,” reports The Telegraph. “The country’s online retail sales maintained high-speed growth over the past 10-plus years, said Gao, who is also deputy director-general of the General Office of the MoC.”

Exposure To Titans

CHIQ, which turns 10 years old in November and has almost $151 million in assets under management, is highly exposed to some of the biggest names in Chinese online retail. Alibaba Group Holding Ltd. (NYSE: BABA), (NASDAQ: JD) and (NASDASQ: CTRP) combine for over a quarter of CHIQ’s weight.

“According to MoC statistics, the business-to-consumer (B2C) model has seen its market share reach 73.5 per cent, up by 3.3 percentage points from the previous year. The sector is becoming more personalised and customised,” reports The Telegraph.

China has been looking to increase internal consumption to reduce the economy’s sensitivity to exports and those efforts appear to be paying dividends. While some data points indicate the Chinese economy and consumer spending are slowing, policymakers remain proactive.

Chinese policymakers believe “full confidence should be maintained that the online retail market will continue growing healthily because the foundations of the industry – innovation models, application of technologies and user habits – have remained unchanged,” according to The Telegraph.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.