Is China’s Rental Market a Sign of Tough Times Ahead?

Per a Wall Street Journal report, rental rates in China’s biggest cities “have been falling in recent weeks, a sign of economic uncertainty in China’s otherwise gravity-defying residential property market. Nationwide, average residential rent levels in large and midsize Chinese cities fell more than 2% in June from a year earlier, for a third consecutive month of declines, according to real-estate data company Beijing Zhuge House Hunter Information Technology Co.”

For example, rental rates in the city of Beijing have been falling 1.4% in June from the previous month. In other cities like Shenzhen, prices have fallen 3.2 in Wuhan, rents have fallen 6%.

“Landlords have been forced to lower their rents, and they’re still aren’t that many tenants,” says Zhang Chaofeng, an agent at a Beijing branch of Lianjia, a brokerage company with thousands of offices across the country.

A few pure-play China exchange-traded funds (ETFs) to watch include the:

1. Xtrackers CSI 300 China A-Shares ETF (ASHR C+): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 300 Index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market. The underlying index includes small-cap, mid-cap, and large-cap stocks.
2. Xtrackers CSI 500 China A-Shares Small Cap ETF (ASHS B): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 500 Index. The index is designed to reflect the price fluctuation and performance of small-cap companies in the China A-Share market and is composed of the 500 smallest and most liquid stocks in the China A-Share market. Under normal circumstances, the fund invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in A-Shares of Chinese small-cap issuers or in derivative instruments and other securities that provide investment exposure to A-Shares of Chinese small-cap issuers.
3. Xtrackers MSCI China A Inclusion Equity ETF (ASHX ): The investment seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI China A Inclusion Index. The fund will normally invest at least 80% of its total assets in securities (including depositary receipts in respect of such securities) of issuers that comprise the underlying index. The underlying index is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.