ETFs That Offer Exposure to Shanghai Growth

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 |  Includes: CAF, CEF
by: Tom Lydon

The United States has imposed trade penalties on tires coming into the country from China and China responded by filing a complaint with the World Trade Organization (WTO), calling the move protectionist and a violation of global trade rules.

The trade disputes between the United States and China are likely to ripple throughout markets, however, major impacts will be felt in the United States as the supply of cheap goods could drop off.

The Chinese government has thrown a lot of money at its economy and banks have issued loans at four times the rate of last year, but the government has started to hint at easing spending, which could halt the country’s economic growth.

Many investors are aware of the exchange traded funds (ETFs) that give access to China’s growth. None of them track the Shanghai Index, but there’s a closed end fund ((NYSEMKT:CEF)) that gives the exposure if you’re seeking it.

Despite recent weakness that began in August, the Shanghai Composite Index is one of the best performing indexes year-to-date and Morgan Stanley China Fund (NYSE: CAF) is "one ETF capable of closely reflecting the Shanghai Composite", writes Blaze Fabry for Chinavester. CAF includes a variety of sectors, but leans toward commercial banks and real estate.

  • Morgan Stanley China Fund: Expense ratio of 1.75%; sectors include: auto components, beverages, capital markets, commercial banks, construction & engineering, construction materials, electric utilities, electrical equipment, household durables, power generators, insurance, machinery, metals & mining, multiline retail, oil & gas, personal products, real estate & development, residential, specialty retail, textiles & apparel, investment company and short-term investment

Max Chen contributed to this post.