Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

2 ETFs For Investors Who Think China Equities Will Gain After Biden-Xi 'Summit'

By (Tezcan Gecgil/ )ETFsNov 22, 2021 11:17
2 ETFs For Investors Who Think China Equities Will Gain After Biden-Xi 'Summit'
By (Tezcan Gecgil/ )   |  Nov 22, 2021 11:17
Saved. See Saved Items.
This article has already been saved in your Saved Items

Long-term investors in Chinese shares have had a volatile year so far in 2021. The state’s heavy hand on technology, online education and real estate names meant significant pressure for those stocks. For instance, this is how several of the widely-followed Chinese shares have fared year-to-date (YTD).

  • Alibaba (NYSE:BABA) - down 39.7% YTD;
  • Baidu (NASDAQ:BIDU) - down 29.8% YTD;
  • Baozun (NASDAQ:BZUN) - down 50.9% YTD;
  • Didi Global (NYSE:DIDI) - down 40.7% since going public in June;
  • (NASDAQ:JD) - up 4.1% YTD;
  • New Oriental Education & Technology (NYSE:EDU) - down 88.2% YTD;
  • Nio (NYSE:NIO) - down 20.7% YTD;
  • Tencent (HK:0700) (OTC:TCEHY) - down 12.1% YTD.

On the other hand, the Shenzhen Composite index is up about 6.9% and the Shanghai Composite index returned 2.5%. By comparison the S&P 500 index, which hit a record high in early November, is up 25.1% YTD. Analysts now debate whether global investors could soon begin to turn cautiously optimistic on Chinese equities.

Meanwhile, on Nov. 15, US President Joseph Biden and his Chinese counterpart, Xi Jinping, had a virtual meeting, which was regarded as a positive step in communicating openly despite points of tension between the two countries. After the meeting, the White House readout said:

“the two leaders covered areas where our interests align, and areas where our interests, values, and perspectives diverge…. [President Biden] was clear about the need to protect American workers and industries from the PRC’s unfair trade and economic practices.”

The World Bank notes that over the past four decades, China’s average annual GDP growth has been around 10%, and the country is now “an upper-middle-income country.”

Put another way, despite in-country regulatory woes as well as occasional global disputes, China is an important country for global investors. Therefore, today’s article introduces two exchange-traded funds (ETFs) that could appeal to readers who believe Chinese equities might fare better in 2022.

1. Global X MSCI China Information Technology ETF

  • Current Price: $29.06
  • 52-Week Range: $27.44 - $39.20
  • Dividend Yield: 1.02%
  • Expense Ratio: 0.65% per year

According to recent metrics, in the first half of 2021, China’s software and information technology (IT) industry saw record revenues of $682.86 billion, an increase of 23.2% percent year-over-year.

The Brookings Institution suggests that “China’s competitive advantage is their ability to out-bulk the US as 1.5 billion people generate data that can then be repurposed for other applications including artificial intelligence (AI) and new products and services… China has established a national goal to be the world leader in artificial intelligence by 2030.”

Our first fund, the Global X MSCI China Information Technology ETF (NYSE:CHIK) offers exposure to large- and mid-capitalization (cap) Chinese IT firms. The fund was first listed in December 2018.

CHIK Daily
CHIK Daily

CHIK, which tracks the MSCI China Information Technology 10/50 Index, currently has 106 stocks. The top ten holdings comprise around 45% of total net assets of over $30 million. In other words, it is a small fund.

The most important sectors in the fund are electronic components (19.56%), semiconductors (17.96%), telecommunications equipment (13.82%), packaged software (13.41%) and computer processing hardware (5.41%).

Leading manufacturer of optical lenses Sunny Optical Technology (OTC:SNPTF); Xiaomi (OTC:XIACF), which manufactures smartphones and and provides Internet services; provider of solar glass Xinyi Solar (HK:0968); Kingdee International Software (OTC:KGDEY), which provides enterprise resource planning (ERP); and Lenovo (OTC:LNVGY), which manufactures personal computers and mobile Internet devices, are among the top names on the roster.

CHIK has declined 3.2% in the past 52 weeks and 13.6% YTD. It also hit a 52-week low on Oct. 6. The fund’s trailing price-to-earnings (P/E) and price-to-book (P/B) ratios stand at 21.86x and 2.28x. Interested readers could consider investing around these levels.

2. SPDR S&P China ETF

  • Current Price: $112.26
  • 52-Week Range: $106.42 - $156.29
  • Dividend Yield: 1.15%
  • Expense Ratio: 0.59% per year

The SPDR® S&P China ETF (NYSE:GXC) invests in both “China A Shares” as well as companies that trade as American Depositary Receipts (ADRs) in the US. Most of our readers would know that China A-shares are RMB-denominated stocks that trade on the Shanghai and Shenzhen Stock Exchanges.

GXC Weekly
GXC Weekly

GXC, which has 897 holdings, tracks the returns of the S&P China BMI Index. The fund began trading in March 2007.

Companies in the consumer discretionary sector makes up the highest portion with 29.16%. Next in line are communication services (16.96%), financials (13.34%), health care (7.98%). The leading 10 names account for about 40% net assets of $1.69 billion.

Leading social media and entertainment company Tencent; e-commerce heavyweights Alibaba and; food ordering and delivery platform Meituan (OTC:MPNGY); electric vehicle (EV) group Nio; and China Construction Bank (OTC:CICHF) are among the most important firms in the fund.

In the past 12 months, GXC is down almost 14% and has lost over 13.8% since January 2021. Trailing P/E and P/B ratios stand at 11.90x and 1.72x. Buy-and-hold investors who believe the decline in Chinese shares could be over soon should research the ETF further.

2 ETFs For Investors Who Think China Equities Will Gain After Biden-Xi 'Summit'

Related Articles

2 ETFs For Investors Who Think China Equities Will Gain After Biden-Xi 'Summit'

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email