Whether you’re looking for a short-term opportunity to trade early new year strength or something for the long haul, one fund to look at is the Global X MSCI China Consumer Staples ETF (CHIS). The fund is up 9% to start 2021 and more strength could be ahead as China’s economy continues the healing process.
The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Consumer Staples 10/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.
The underlying index tracks the performance of companies in the MSCI China Index (the “parent index”) that are classified in the consumer staples sector, as defined by the index provider. ETF investors can get access to this international play for diversification at a 0.67% expense ratio.
Overall, CHIS gives investors:
- Targeted Exposure: CHIS is a targeted play on the Consumer Staples Sector in China – the world’s second-largest economy by GDP.
- ETF Efficiency: In a single trade, CHIS delivers access to dozens of consumer staples companies within the MSCI China Index, providing investors an efficient vehicle to express a sector view on China.
- All Share Exposure: The Index incorporates all eligible securities as per MSCI’s Global Investable Market Index Methodology, including China A, B, and H shares, Red chips, P chips, and foreign listings, among others.
The fund’s been a stellar performer, gaining over 70% within the past year. Buyers looking to get in on an area of value can apply some technicals to the one-year chart below.
Using a relative strength index (RSI), CHIS is well above overbought levels and when applying a Bollinger Bands™ indicator, its price has moved past the upper band. Both these signs signal a fall in prices might be ahead so for short-term traders or even long-term investors looking for an entry point, they could wait or build off the current momentum.
More Stimulus Can Stimulate CHIS
Fundamentally, the Chinese government can help stimulate CHIS with more stimulus dollars pumped into the economy. This can certainly help give China an extra shot in the arm as a global vaccine continues to roll out.
“Investors could pay attention to residents’ income recovery and measures to stimulate consumption in 2021, as China’s consumption recovery was relatively weak in 2020 amid the coronavirus outbreak,” Luo Kun, director of macro strategy center at Chasing Securities, noted in a report.
“The spring rally is here now as investors expect more policy support from Beijing and as banks usually lend more at the start of a new year, which would mean more liquidity in the market,” said Fu Yanping, an analyst with China Galaxy Securities.