The White House confirmed yesterday that President Trump will meet Chinese President Xi Jinping on Oct. 30 in South Korea during the upcoming Asia-Pacific Economic Cooperation (“APEC”) Summit, marking their first in-person engagement since Trump’s return to the Oval Office. The announcement immediately lifted investor sentiment across Asia on Thursday, pushing regional indices like Nikkei and IDX Composite higher on hopes that the discussions would improve U.S.-China trade relations.

A favorable outcome from this summit could meaningfully benefit emerging markets in the Asia-Pacific region that are often heavily reliant on international trade and susceptible to shifts in global economic sentiment. Thus, the latest development could be a crucial signal for investors to consider entering these Asia-Pacific emerging market exchange-traded funds (ETFs), anticipating a favorable outcome from the APEC summit.

Now, before delving deeper into which Asia-Pacific Emerging ETFs might be profitable for your portfolio, let’s take a sneak peek at the industries that will benefit the most from improved U.S.-China trade relations.

Key Industries to Benefit

An improved trade framework would particularly benefit the following key industries due to their deep reliance on trans-Pacific trade and supply chains.

• Technology & Semiconductors: U.S. export controls on advanced semiconductors have been a major point of contention. A de-escalation could ease restrictions and benefit the Asian tech manufacturing ecosystem.

• Clean Energy & EVs: China dominates the supply chain for technologies like batteries, motors, and rare earth minerals, which are critical for electric vehicles (EVs) and renewable energy products. Stable trade relations should boost U.S. access to these components.

• Retail & Consumer Goods: These industries are heavily dependent on China, which provides cost-efficient and scalable manufacturing for a wide range of products, from electronics and apparel to toys and cosmetics.. A reduction in tariffs would lower costs for U.S. importers and boost the export-oriented manufacturing hubs in Asia.

• Agriculture & Healthcare: These two industries are also deeply integrated into global supply chains. Agricultural exports from the United States to China and medical components manufacturing in Asia would benefit from reduced trade uncertainty.

A positive outcome from the upcoming summit would reduce costs, ease supply-chain bottlenecks, and improve market sentiment for these industries.

The Case for Asia Pacific Emerging ETFs

Asia-Pacific emerging ETFs, covering economies like China, India, Vietnam, and Malaysia, possess unique traits that position them to benefit more than their U.S. counterparts from positive U.S.-China trade talks. These ETFs often hold a significant proportion of companies with direct exposure to Chinese markets or supply chains, making them highly responsive to changes in bilateral trade. Additionally, many of these economies are in earlier stages of development, offering higher growth potential, which can be further amplified by favorable external conditions.

In fact, it is interesting to notice that currently, Asia-Pacific emerging ETFs bear the potential to outperform U.S.-listed ETFs when global trade optimism strengthens. This can be supported by the most recent available data that shows investors have put more than $175 billion into “ex-U.S.” global equity mutual funds and ETFs over the past month compared with just over $100 billion into global funds that include U.S. stocks (as per a report published by Financial Times in early October).

This indicates a shift in global investment strategy, with a greater focus on non-U.S. markets, with Asia-Pacific at the center of attraction against the U.S.-China trade backdrop. With relatively low valuations and robust manufacturing recovery, Asia-Pacific Emerging ETFs thus appear well-positioned to absorb trade tailwinds, considering next week’s Trump–Xi summit yields some progress.

ETFs in Spotlight

The upcoming summit represents a pivotal moment for global trade. Savvy investors might consider this an opportune time to explore the following Asia-Pacific emerging ETFs, anticipating significant gains.

SPDR S&P Emerging Asia Pacific ETF ((GMF Quick QuoteGMF - Free Report) )

This fund, holding 1,280 stocks, offers exposure to large, mid, and small-cap companies domiciled in emerging Asian Pacific markets. It has assets under management (AUM) worth $401.5 million. Taiwanese semiconductor and electronic components manufacturer, Taiwan Semiconductor ((TSM Quick QuoteTSM - Free Report) ), has the first position in this fund, holding 10.51% of shares.

GMF has soared 22.8% year to date. The fund charges 49 basis points (bps) as fees.

iShares MSCI Emerging Markets Asia ETF ((EEMA Quick QuoteEEMA - Free Report) )

This fund, holding 869 stocks, offers exposure to companies in emerging market countries in Asia. It has net assets of fund worth $1.58 billion. TSM also has the first position in this fund, holding 14.49% of shares.

EEMA has soared 31% year to date. The fund charges 49 bps as fees.

KraneShares SSE STAR Market 50 Index ETF ((KSTR Quick QuoteKSTR - Free Report) )

This fund offers exposure to the 50 largest innovation-driven science and technology companies in China that offer a potential source of uncorrelated, long-term growth. It has net assets worth $53.5 million. Chinese AI-chipmaker, Cambricon Technologies, holds the first position in this fund, holding 13.19% of shares.

KSTR has surged 51.6% year to date. The fund charges 89 bps as fees.