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China ETFs in Spotlight on Strong Economic Data

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The world’s second-largest economy has once again impressed with encouraging economic data releases. The positive data highlight that China is recovering well from the pandemic-led economic slowdown. Recently, the country also gained investors’ attention as its export levels have risen at the fastest pace in November 2020 since February 2018.

Economic Data in Detail

There was a 7% year-over-year rise in industrial output in November, per a Reuters article. The metric compares favorably with October’s 6.9% growth. It also came in line with economists’ forecast, according to a Reuter’s poll. Notably, the metric increased for the eighth consecutive month with support from solid export levels. Moreover, retail sales were up 5% year over year in November from October’s 4.3% reading. However, the metric lagged the analysts’ estimate of 5.2% growth, per a Reuters’ poll.

Moving on, fixed-asset investments were also up as they gained 2.6% year over year in the January-November period, on par with the forecast (per a Reuters article). Further, the same compared favorably with the 1.8% increase in the first 10 months of 2020. China’s exports also climbed 21.1% year over year in November, comparing favorably with 11.4% growth recorded in October.

Going by the Nomura analysts, China’s export level is driven by growing global demand for personal protective equipment (PPE) and electronics products like fridges, toasters and microwaves for meeting work-from-home needs as well as seasonal Christmas demand as mentioned in a Reuters article. Moreover, surging domestic demand and escalating commodity prices lent support.

China’s trade surplus with the United States widened to $37.42 billion in November from $31.37 billion in October, per a Reuters article. Meanwhile, president-elect Joe Biden is expected to have a similar take on China as the Trump administration, expressing his concerns over the country posing a threat to America’s supremacy in technology and as a global superpower. Nonetheless, the ground on which Biden’s approach will be different from Trump’s regime is ‘diplomacy’.

Per a CNBC article, Biden plans to work along with allies like Japan, Europe and others to build pressure on China in order to impose market-friendly trade practices and reform some World Trade Organisation rules. Notably, experts believe that the initial phase of the Biden era is expected to maintain the tariffs imposed by Trump. Going by The Wall Street Journal article, Biden expressed interest in working along with China on some global concerns like the coronavirus pandemic and climate change.

China ETFs That Can Gain

Against this backdrop, investors can keep tabs on a few China ETFs like iShares MSCI China ETF (MCHI - Free Report) , iShares China Large-Cap ETF (FXI - Free Report) , Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR - Free Report) , SPDR S&P China ETF (GXC - Free Report) , iShares MSCI China A ETF (CNYA - Free Report) and Invesco Golden Dragon China ETF (PGJ - Free Report) .

MCHI

This fund tracks the MSCI China Index. It comprises 605 holdings. Its AUM is $6.47 billion and has an expense ratio of 0.59% (read: ETFs in Focus on Alibaba's Strong Fiscal Q2 Earnings).

FXI

This fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the FTSE China 50 Index. It comprises 50 holdings. The fund’s AUM is $4.06 billion and the expense ratio, 0.74% (read: Winning ETF Areas After First Presidential Debate).

ASHR

This fund tracks the CSI 300 Index. It comprises 300 holdings. The fund’s AUM is $2.53 billion and the expense ratio, 0.65%.

GXC

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P China BMI Index. It comprises 764 holdings. The fund has an AUM of $1.75 billion and an expense ratio of 0.59%.

CNYA

The fund tracks the MSCI China A Inclusion Index. It comprises 475 holdings. The fund’s AUM is $566.3 million and the expense ratio, 0.60%.

PGJ

This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies, headquartered or incorporated in the People’s Republic of China. It holds a basket of 68 stocks. The product has an AUM of $220.4 million and charges 70 basis points in annual fees.

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