The People’s Bank of China (PBOC) appears on the precipice of making another cut to the “reserve requirement ratio” (RRR). Such a cut may boost the mainland economy, allowing banks to loan a bit more without keeping as much in reserve. The PBOC looks set to time such a cut to match potential cuts at the Federal Reserve in the U.S. Amid those moves, it may be worth taking a look at what kind of China ETFs are appealing right now.
See more: KraneShares Unveils New AI-Powered China ETF
One intriguing strategy, the KraneShares MSCI One Belt One Road Index ETF (OBOR ), presents an appealing spin on standard China investing. The fund predominantly focuses on China-based names, but provides a degree of diversification, too. The strategy looks at firms that benefit from the country’s so-called One Belt, One Road initiative. The OBOR initiative looks to boost cooperation between China and nearby countries, many of which fall into the South and Southeast Asian regions.
China ETFs and OBOR
OBOR invests a plurality of its assets in Chinese firms. Per KraneShares, the fund has returned 8.4% YTD on a cumulative basis. On an average, annualized basis, OBOR has returned 7.3% over the last full year.
OBOR could stand out by combining a degree of China exposure with broader diversification that still relates to the country. Per ETF Database analysis, too, the fund’s top three holding areas include finance, utilities, and non-nergy minerals. Those areas often zig when the market zags, with finance, utilities, and minerals often providing a strong base from which to invest in other areas.
That broad combination of solid China firms, foreign diversification in emerging markets, and a potential boost to the country’s economy may appeal to curious investors. For those looking for a healthy degree of China ETF exposure with upside, OBOR could be one to watch.
For more news, information, and analysis, visit the China Insights Channel.
