Fit for Investor Consumption: The Consumer-Focused CHIS ETF

As China continues its path to recovery from the COVID-19 pandemic, consumer staples is one of the sectors leading the way. ETF investors may want to give the Global X MSCI China Consumer Staples ETF (CHIS) a look, especially if China can continue to implement stimulus measures to promote spending.

CHIS seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Consumer Staples 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 Index (the “parent index”) that are classified in the consumer staples sector, as defined by the index provider.

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 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.

The fund has been a stellar performer thus far this year, gaining 42% based on Yahoo Finance performance numbers. The fund is up almost 50% within the past year.

CHIS Chart

Consumption is Key

The road to recovery won’t happen without more money pumping into China’s economy. That said, more stimulus and encouragement by the government to spend via stimulus packages will certainly fuel more gains for CHIS.

The consumer discretionary sector is already moving higher per a Reuters report.

“Consumer shares led the rally, with the CSI300 consumer staples index and the CSI300 consumer discretionary index rising 1.3% and 1.6%, respectively,” the report said. “China will expand consumption of cars and consumption in rural areas, according to a report by state broadcaster CCTV, citing a meeting of the country’s cabinet chaired by Premier Li Keqiang.”

“China will also promote the consumption of home appliances and catering, CCTV reported,” the report said further. “Dual-listed Guangzhou Automobile Group Co Ltd rallied in both Shanghai and Hong Kong, leading the gains for carmakers. Adding to sentiment, President Xi Jinping said China would continue to cut its tariffs and expand imports of high-quality goods and services.”

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