Ongoing U.S. interest rate cuts could prove favorable for emerging market securities as the U.S. dollar strength retreats in the near-term. Investors looking to add exposure to emerging market should consider the e-commerce oriented KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ ).
Policy support continues within China, with domestic investors responding positively to Friday’s NPC announcements. However, the divergence of foreign and domestic investor sentiment remains ongoing in regards to China.
“While foreign investors and Western media pan Friday’s NPC release for the lack of domestic consumption stimulus, Mainland investors cheered the news with a foreign bank’s Shanghai fixed income trading desk calling the announcement ‘significant fiscal policy adjustments,’” wrote Brendan Ahern, CIO of KraneShares, in the China Last Night blog.
The Citigroup Economic Surprise Index measures the difference between market expectations and economic data, according to MacroMicro. A measurement above zero reflects economic performance that beats expectations. This in turn creates potential positive momentum for the CSI 300 Index. This index measures the 300 largest companies on the Shanghai and Shenzhen Stock Exchanges.
Invest in Emerging Market Consumer Technology With KEMQ
Ongoing policy support creates tailwinds for Chinese equities, but many investors currently maintain an underweight to China within their portfolios. Investors with an eye towards harnessing this potential while also diversifying risk across the region should consider the KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ ).
The fund targets consumer technology within emerging markets by seeking to track the Solactive Emerging Markets Consumer Technology Index. It offers exposure to the Google, Paypal, Amazon, and other equivalents within emerging markets. The top sector included consumer discretionary at 34.92% weight, communication services at 32.66% weight, and information technology at 22.95% weight as of 09/30/24.
KEMQ focuses on internet retail and e-commerce growth in 26 emerging market countries, including China. Top countries included China, South Korea, and Taiwan as of the end of the third quarter. The fund’s structure ensures diversification because of its limitation on country inclusion. One country only accounts for 40% of the fund, with a maximum holding weight of 3% at rebalance.
KEMQ has an expense ratio of 0.50% with a fee waiver that expires on August 1, 2025.
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