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  • How To Play The China Materials Investments In The Current Year? 0 comments
    Apr 20, 2013 7:27 AM

    The support case for investments in the China Material ETFs must not only consider the last three years of economic performance; rather a positive outlook arises from the anticipated domestic consumption, when a majority out of 1.35 billion Chinese will have upgraded to the middle class status.

    Historically, China has bucked a global trend on more than one occasion and is capable of repeating the feat of decoupling from the uncertainties in the global capital markets. Only this time around this reverse trend will be backed by strong fundamentals which are a direct result of State's deliberate measures to substantially increase the domestic consumptions contribution to the nation's GDP. Investing in China Material Sector fund allows for a diversified exposure that includes equity right from the cement manufacturers to the producers of precious and non precious metals, most of which is else wise unavailable to foreign investors or simply will have compliance issues.

    China has the most number of dwellers in the world, crossing the 1.35 billion marks. It has been given a special name that is the super power of the eastern world owing to its special status as the world's fastest growing economy. The economy that slowed down will still project a growth of an easy 7.5 % to 9% in the near term. It is currently the second largest economy globally barely behind USA but growing as much as three times faster.

    About more than a decade ago China was heavily reliant on exports and thus the manufacturing sector. A shift in this dependency can be seen due to the rural population journeying to Chinese cities and soon adding on to the numbers of the middle class segment. Therefore now the nation is majorly driven by increased spending and consumption by its own natives and the local manufacturers along with the national level players have a continuous demand for the raw materials to suffice the biggest consumer pool on the planet.

    China's new president named Xi Jinping, as anticipated could introduce some radical reforms that would prove to be favourable for the nation as a whole. The newer generation of the country are well informed and less tolerant to corrupt practices.

    Chinese stock market has also shown positive signs in the wake of the new leadership and the china equities and funds have performed exceedingly well in the past 7 months after a dull phase especially since the year 2011. These funds promise to continue the uptrend in the time to come. Both United States and trade partner Europe displaying stable picture will help China in more than one ways. The strong United States situation has increased China's exports to the country.

    The financial advisors are foreseeing tremendous potential in the infrastructure and manufacturing sector. Also the betterment in financial position of the above mentioned economies is one reason for the prior mentioned prediction. China posted a huge growth in the manufacturing sector in the last quarter of the fiscal year 2012. This case is best suited for investment in the China Materials equity funds (such as CHIM ETF).

    The ETFs help investors to pile up shares of different firms under one basket. Many of these shares are often not available to foreign investors independently outside the equity traded fund. Diversification and minimum risk are other benefits teamed with the ETF route along with much lower operational costs when compared with direct equity investments.

    The nation today produces almost half of the cement and iron ore in the world and its production count for other vital materials is also among the best. There isn't much guessing on long term outlook on Global China materials ETF either.

    Global X China Materials ETF [CHIM] corresponds to the 29 stocks that are tracked through the Solactive China Materials Index after the annual expenses of 0.65%. Dongyue Group Ltd., Angang New Steel Co., CITIC Pacific Ltd. and Shanghai Petro Co. are the top four assets for Global X CHIM ETF. As per the issuers Global X China Materials is a primary product for the company simply because of the core asset class it covers.

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