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Chinese stock market has gained momentum lately on signs of economic recovery and hopes of more support from the government. The reopening of the economy after the end of the COVID-19 restrictions has brought a rebound in consumer spending, industrial output and investment this year.
Investors could tap the rebounding economy with the popular ETFs in the space. These include iShares MSCI China ETF (MCHI - Free Report) , KraneShares CSI China Internet ETF (KWEB - Free Report) , iShares China Large-Cap ETF (FXI - Free Report) , SPDR S&P China ETF (GXC - Free Report) and Invesco China Technology ETF (CQQQ - Free Report) .
Economic activity in China strengthened in the first two months of the year as the country emerged from almost three years of tough COVID-19 restrictions. Retail sales rose 3.5% in January and February compared to the same period last year, marking a sharp turnaround from the 1.8% annual contraction recorded in December, per the National Bureau of Statistics. Industrial output rose 2.4% and fixed-asset investment climbed 5.5% for the two-month period, as local governments increased infrastructure spending to spur the recovery (read: 5 ETFs to Tap on China's High Growth Prospects).
Added to the positive sentiment is the strong credit growth. Money supply in China expanded at the fastest pace in nearly 7 years, as Beijing looked to support a promising economic recovery amid rising global risks. The combination of data suggests that the second-largest economic recovery is on track after posting one of its weakest years for growth in decades in 2022.
According to the International Monetary Fund, China is expected to expand 5.2% this year versus 3% last year and is now expected to contribute a third of global growth this year.
However, rising unemployment and real estate slump will continue to weigh on the growth prospects.
iShares MSCI China ETF targets the Chinese stock market and follows the MSCI China Index. Holding 629 securities in its basket, the fund is highly concentrated on the top firm. From a sector look, about 28.5% of the portfolio is allotted to consumer discretionary, while communication (19.2%) and financials (15.9%) round off the next two spots.
iShares MSCI China ETF has amassed $8.1 billion in its asset base while charging 58 bps in annual fees. Volume is also solid as it exchanges nearly 5.2 million shares daily on average. The ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
KraneShares CSI China Internet ETF provides concentrated exposure to China-based companies whose primary business, or businesses are focused on Internet and Internet-related technology. KraneShares CSI China Internet ETF tracks the CSI China Overseas Internet Index and holds 34 securities in its basket, with a higher concentration on the top firms.
KraneShares CSI China Internet ETF has amassed $5.6 billion in its asset base and charges 69 bps in annual fees from investors. KWEB trades in an average daily volume of 18.1 million shares and currently has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
iShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket with a slight tilt toward the top three firms. iShares China Large-Cap ETF has key holdings in the consumer discretionary sector with 31.3% share, while financials (28%) and communication (19.7%) round off the next two spots.
iShares China Large-Cap ETF has AUM of $5.3 billion and an expense ratio of 0.74%. It trades in an average daily volume of 35 million shares and has a Zacks ETF Rank #5 with a Medium risk outlook (read: U.S.-China Aerial Conflict Intensifies: ETF Areas in Tight Spot).
SPDR S&P China ETF follows the S&P China BMI Index and seeks to provide exposure to the publicly traded companies domiciled in China that are available to foreign investors. It holds 938 stocks in its basket, with a higher concentration on the top firm. SPDR S&P China ETF has the largest allocation in consumer discretionary at 26.9%, while communication services and financials round off the next two spots.
SPDR S&P China ETF has amassed $1.2 billion in its asset base and sees an average daily volume of 161,000 shares. The fund charges investors 59 bps in annual points and has a Zacks ETF Rank #3 with a Medium risk outlook.
Invesco China Technology ETF follows the FTSE China Incl A 25% Technology Capped Index, which includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B-shares. It holds 131 stocks in its basket with a concentration on the top firm (read: What Tech Crash? 5 Tech ETFs Up Double-Digit Past Month).
Invesco China Technology ETF manages an asset base of $925.7 million while charging 70 bps in fees per year. It trades in a volume of 233,000 shares per day on average and has a Zacks ETF Rank #5 with a High risk outlook.
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5 China ETFs to Tap as Economy Recovers
Chinese stock market has gained momentum lately on signs of economic recovery and hopes of more support from the government. The reopening of the economy after the end of the COVID-19 restrictions has brought a rebound in consumer spending, industrial output and investment this year.
Investors could tap the rebounding economy with the popular ETFs in the space. These include iShares MSCI China ETF (MCHI - Free Report) , KraneShares CSI China Internet ETF (KWEB - Free Report) , iShares China Large-Cap ETF (FXI - Free Report) , SPDR S&P China ETF (GXC - Free Report) and Invesco China Technology ETF (CQQQ - Free Report) .
Economic activity in China strengthened in the first two months of the year as the country emerged from almost three years of tough COVID-19 restrictions. Retail sales rose 3.5% in January and February compared to the same period last year, marking a sharp turnaround from the 1.8% annual contraction recorded in December, per the National Bureau of Statistics. Industrial output rose 2.4% and fixed-asset investment climbed 5.5% for the two-month period, as local governments increased infrastructure spending to spur the recovery (read: 5 ETFs to Tap on China's High Growth Prospects).
Added to the positive sentiment is the strong credit growth. Money supply in China expanded at the fastest pace in nearly 7 years, as Beijing looked to support a promising economic recovery amid rising global risks. The combination of data suggests that the second-largest economic recovery is on track after posting one of its weakest years for growth in decades in 2022.
According to the International Monetary Fund, China is expected to expand 5.2% this year versus 3% last year and is now expected to contribute a third of global growth this year.
However, rising unemployment and real estate slump will continue to weigh on the growth prospects.
ETFs to Tap
iShares MSCI China ETF (MCHI - Free Report)
iShares MSCI China ETF targets the Chinese stock market and follows the MSCI China Index. Holding 629 securities in its basket, the fund is highly concentrated on the top firm. From a sector look, about 28.5% of the portfolio is allotted to consumer discretionary, while communication (19.2%) and financials (15.9%) round off the next two spots.
iShares MSCI China ETF has amassed $8.1 billion in its asset base while charging 58 bps in annual fees. Volume is also solid as it exchanges nearly 5.2 million shares daily on average. The ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
KraneShares CSI China Internet ETF (KWEB - Free Report)
KraneShares CSI China Internet ETF provides concentrated exposure to China-based companies whose primary business, or businesses are focused on Internet and Internet-related technology. KraneShares CSI China Internet ETF tracks the CSI China Overseas Internet Index and holds 34 securities in its basket, with a higher concentration on the top firms.
KraneShares CSI China Internet ETF has amassed $5.6 billion in its asset base and charges 69 bps in annual fees from investors. KWEB trades in an average daily volume of 18.1 million shares and currently has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
iShares China Large-Cap ETF (FXI - Free Report)
iShares China Large-Cap ETF offers exposure to large companies in China by tracking the FTSE China 50 Index. It holds 50 stocks in its basket with a slight tilt toward the top three firms. iShares China Large-Cap ETF has key holdings in the consumer discretionary sector with 31.3% share, while financials (28%) and communication (19.7%) round off the next two spots.
iShares China Large-Cap ETF has AUM of $5.3 billion and an expense ratio of 0.74%. It trades in an average daily volume of 35 million shares and has a Zacks ETF Rank #5 with a Medium risk outlook (read: U.S.-China Aerial Conflict Intensifies: ETF Areas in Tight Spot).
SPDR S&P China ETF (GXC - Free Report)
SPDR S&P China ETF follows the S&P China BMI Index and seeks to provide exposure to the publicly traded companies domiciled in China that are available to foreign investors. It holds 938 stocks in its basket, with a higher concentration on the top firm. SPDR S&P China ETF has the largest allocation in consumer discretionary at 26.9%, while communication services and financials round off the next two spots.
SPDR S&P China ETF has amassed $1.2 billion in its asset base and sees an average daily volume of 161,000 shares. The fund charges investors 59 bps in annual points and has a Zacks ETF Rank #3 with a Medium risk outlook.
Invesco China Technology ETF (CQQQ - Free Report)
Invesco China Technology ETF follows the FTSE China Incl A 25% Technology Capped Index, which includes constituents of the FTSE China Index and FTSE China A Stock Connect Index that are classified as information technology securities, including China A-shares and China B-shares. It holds 131 stocks in its basket with a concentration on the top firm (read: What Tech Crash? 5 Tech ETFs Up Double-Digit Past Month).
Invesco China Technology ETF manages an asset base of $925.7 million while charging 70 bps in fees per year. It trades in a volume of 233,000 shares per day on average and has a Zacks ETF Rank #5 with a High risk outlook.