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China ETFs to Gain on Solid Exports Data for December

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China seems to be recovering well from the pandemic-induced economic slowdown. The continued strength in the export levels can be largely attributed to the solid global demand for the coronavirus outbreak-related goods. Per the customs agency, China’s factories exported around 40 face masks for each person globally, according to a Bloomberg article. Furthermore, amid the globally-worsening health crisis, China’s trade surplus jumped to a record high.

The world’s second largest economy’s timely control of the virus outbreak in the previous year gave an advantage to its factories to get hold of global demand, per a Bloomberg article. According to Michelle Lam, Greater China economist at Societe Generale SA in Hong Kong, “the biggest takeaway is that China’s exports have remained surprisingly resilient despite the return of the second wave in major economies,” as mentioned in a Bloomberg article.

Data in Detail

China’s exports climbed 18.1% year over year in December, in comparison with the 21.1% rise recorded in November. Meanwhile, imports rose 6.5% year on year in December versus November’s 4.5% increase. Notably, both the metrics beat analysts’ expectations of a year-over-year increase of 15% for exports and a rise of 5% for imports in the same period, per a Reuters’ poll.

Remarkably, trade surplus in December came in at $78.17 billion, beating analyst expectation of $72.35 billion, per a Reuters’ poll. It also compares favorably with the $75.40-billion surplus in November. Going on, the trade surplus came in at $535 billion for 2020, up 27% from 2019 as well as the highest since 2015, per a Bloomberg article.

There was also a 34.5% year-over-year surge in the exports level to the United States in December, while imports of U.S. goods jumped 47.7%, the most since January 2013, per a Bloomberg article. Markedly, China’s trade surplus with the United States climbed 7% year over year to $317 billion for full-year 2020.

Notably, China is projected to be the only Group of 20 nations to deliver a positive economic growth rate in 2020, per a South China Morning Post article. Going by the same article, China is projected to see an economic growth rate of 1.9% by the International Monetary Fund and 2% by the World Bank.

According to Jian Chang, chief China economist at Barclays Plc in Hong Kong, China is seeing good demand for both pandemic- and non-pandemic related goods, per a Bloomberg article. Meanwhile, some analysts are of the opinion that the upswing in exports will be difficult to sustain after the health crisis is brought under control in the major markets like United States and Europe, and industrial production is recovered considering that the inoculation process has begun.

In this regard, Julian Evans-Pritchard, senior China economist at Capital Economics has said that “but further ahead, the current strength of exports is unlikely to be sustained indefinitely, especially given that consumption patterns overseas should gradually return to normal as vaccines are rolled out. And imports are likely to drop back as policy support is gradually withdrawn throughout this year,” per a South China Morning Post article.

China ETFs That Can Gain

Against this backdrop, investors can keep a tab 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 591 holdings. The fund’s AUM is $6.75 billion and expense ratio, 0.59% (read: 6 Predictions for the ETF World in 2021).

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 $4.18 billion and expense ratio is 0.74% (read: Top Foreign ETFs of 2020 That Are Up At Least 40%).

ASHR

This fund tracks the CSI 300 Index. It comprises 292 holdings. The fund’s AUM is $2.55 billion and 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 806 holdings. The fund’s AUM is $1.95 billion and expense ratio is 0.59% (read: ETFs in Focus on Alibaba's Strong Fiscal Q2 Earnings).

CNYA

The fund tracks the MSCI China A Inclusion Index. It comprises 461 holdings. The fund’s AUM is $657 million and expense ratio is 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 70 stocks. The product has an AUM of $263.3 million and charges 70 basis points in annual fees.

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