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  • Simplifying Exposure To The China Consumer ETF 1 comment
    Jun 5, 2013 8:23 AM

    China clearly suffices for her status as the Eastern Superpower and the economic growth has many facets in this nation which is home to above 135 billion natives. Although, still calling it an emerging economy is an understatement of sorts but is mandatory, owing to the millions of first time consumers that are emerging from the middle classes of China. Investments in the China consumer sector, currently entice for exposure through broader market products in form of China Consumer ETF. The likes of CHIQ ETF are in easy access of foreign investors, who in turn get a basket of most liquid and large cap Chinese Consumer equity and such funds often follow an underlying bench mark, Solactive or otherwise but listed on Dow and NASDAQ.

    The investors who want to play long term on the Asia consumer story and in particular on that of China will be relieved to know that by 2020, when additional 200 million citizens will be residing in the urban areas, the Sino consumer sector may havegrown manifold, supplying endless products to the first time users of commodities like houses, cars and smart phones etc. The growth will simultaneously create expansive markets where goods are available readily and at cheap prices and will always have a ready buyer.

    The rural rush to the urban centres from the villages has contributed to an increase in the consumer demand and up gradation of lifestyles. This will thus increase the number of people entering the middle class segment. The economy is supported less by exports and more by domestic spending in times of today. China has outstripped other emerging nations on the per capita consumption chart.

    The heightened living standard of Chinese people can be measured with the imports of luxury cars and other goods from across the globe. Greater than a million cars were imported (most of them were top end motoring makes) in the preceding year.

    The country is hugely inclined to buying gold and has had a record total demand (including jewellery) of more than 255 tons in the year 2012.

    The GDP growth picture for China seems increasingly optimistic as the annual mark is said to middle between over 8 % to an achievable 10 % or so. The stock market has shown signs of improvement though it is still at a reasonable valuation compared to its historical record; therefore it presents a good buying opportunity. The election of a new government leadership has furthered the confidence in the indigenous population and to some extent international investors.

    Foreign investors seeking to gain wide spread and sector specific exposure across borders can look at ETFs and in particular China Consumer ETF.

    In fact the country's industrial and manufacturing division is impressively developed and promises to surpass United States in this segment by the year 2015. (Coming back to) Invest china consumer sector has a great potential lined up for further advancement owing to more than one reason.

    The increased consumerism and associated spending has accounted more than 35 % of this nation's GDP.

    Even the state polity wants to focus on heightening the consumer demand and domestic spending in itseconomy.In fact consumer directed firms are considered to withstand any negative phase of the economic cycle and give out high returns throughout. These companies (consumer staples and discretionary) that cater to the upsurge in house hold income look to be well placed even in future time. Consumer staples' stocks are aptly deemed to be non-cyclical as people cannot cut out indispensable household items such as food and beverages etc. from their budget even in times of crunch.

    Global X China Consumer ETF delivers as per the performance of the Solactive China Consumer Index post an operational fee of 0.65% on the annual transactions. The CHIQ ETF and its underlying benchmark provide exposure to firms (forty one) involved in automobile manufacturing, producing apparels and sport goods, food & beverages and departmental stores. Chiq global x china consumer gives an almost equal weight age to all its assets that among others include stocks of Great Wall Motor Co. [5.82%], Want-Want Holdings Ltd [5.32%] and the popular Dongfeng Motor Group Co. Ltd.

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  • short WFC
    , contributor
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    what about risks of misleading accounting, corruption etc? isnt it better to invest in american companies that are subject to accepted accounting principles and who do high fraction of their business in china?
    2 Sep 2013, 11:59 AM Reply Like
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