As Restrictions Of All Kinds Ease, 2 China ETFs To Tap World's 2nd Largest Economy

 | Jul 14, 2022 13:29

  • Easing of COVID lockdowns and relaxation of regulatory pressure on tech firms in China behind investor interest in Chinese equities
  • Potential lowering of U.S. tariffs on Chinese goods
  • China ETFs for investors looking for international diversification

    • In June, investors poured a record amount into the exchange-traded funds (ETFs) lower the tariffs on Chinese goods—which could be another near-term catalyst for the market.

    As a result, the Shenzhen Composite Index, one of the two benchmark indices in mainland China, has returned 4.1% over the past month, while the Shanghai Composite Index remained about flat. However, so far in the year, these indices have lost around 13.5% and 9.8%, respectively. By comparison, the S&P 500 and the Dow Jones Industrial Average fell 21.5% and 16.9%, respectively, over the same period.

    Nonetheless, some investors are still questioning where Chinese equities may go from here, especially given the uncertainty of the macro environment.

    “Future demand depends on the likelihood of further lockdowns as the government remains committed to its zero-COVID policy,” said Iris Pang, chief economist for Greater China at ING.

    Thus, the question remains whether relaxations of pandemic regulations and the easing of internet regulation, alongside government stimulus , could continue to buoy the Chinese stock market. That said, here are two China ETFs that could appeal to readers looking to add international diversification to their portfolios.

    h2 1. Global X MSCI China Consumer Discretionary ETF/h2

    Current Price: $21.87
    52-Week Range: $15.19 - $34.03
    Dividend Yield: 0.27%
    Expense Ratio: 0.65% per year

    China is the world's second-largest economy after the U.S. It is also the world’s most populous nation with a vastly expanding urban middle class.

    The Global X MSCI China Consumer Disc ETF (NYSE:CHIQ) targets an increasingly popular investment theme within China—the consumer. The fund mainly invests in equities of Chinese large- and mid-cap consumer discretionary companies.