ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. China Insights Channel
  2. The Right Way to Tap Into China’s Economy
China Insights Channel
Share

The Right Way to Tap Into China’s Economy

Tom LydonApr 13, 2023
2023-04-13

China’s economy — the world’s second-largest — is recovering thanks in large part to policymakers there halting coronavirus restrictions. As a result, the potential benefits and investment implications are widespread, but investors would do well to drill down on exactly what sectors and industries are best-positioned to rise as the Chinese economy recovers.

Perhaps surprising to some market participants is the point that as this behemoth economy rebounds, there’s debate emerging about goods and services — as in, which is the better way to tap the resurgence. Fortunately, exchange traded funds ease the burden of solving that riddle. Enter the KraneShares CSI China Internet ETF (KWEB B).

A recent sell-off could present investors with a buying opportunity in the dominant China internet ETF. Equally as important, KWEB is positioned to capitalize on Chinese consumers prioritizing services over cyclical goods.

“Against this macro backdrop, we believe that services such as tourism, transportation and food services will drive the recovery. During the pandemic, mobility restrictions and social distancing policies caused a much more serious drag on services compared to good producers — and China is no exception to this pattern,” noted Morgan Stanley’s Diego Anzoategui — a member of the bank’s global economics team.

While KWEB holdings such as Alibaba (BABA) and JD.com (JD) are perceived as levered to the cyclical goods trade, the former has services inroads, as does the ETF at large. For example, KWEB top-10 holding Trip.com, which accounts for 4.43% of KWEB’s roster, is obviously levered to resurgent travel in China.

In March, Macau posted its best month of gross gaming revenue (GGR) since January 2020. For investors considering KWEB, that’s pertinent because more than eight out of every 10 visitors to the casino enclave are from mainland China or Hong Kong.

Assuming that China’s consumer cyclical recovery is rooted in services, KWEB becomes all the more relevant to investors because benefits derived from a services-driven rebound are likely to be confined to China, not spread to other developing economies.

“If China’s acceleration were to be goods driven, Asia and LatAm commodity exporters would be clear beneficiaries, particularly economies like Korea, Taiwan, Argentina, Brazil and Chile,” concluded Anzoategui. “But the situation is different when services lead the way, and the relative advantage of manufacture-intensive Asian economies is less obvious in this case. Ultimately, our work suggests a more services driven rebound in China would be less relevant for the global economy.”

For more news, information, and analysis, visit the China Insights Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X