China is focused on achieving a very stable economic growth. This focus has been based on its domestic consumption and changing reforms. China has strengthened its financial services in the agricultural industry and its small businesses. This strengthening has sucked a huge amount of capital which has put its economy into a very challenging position. Not only this, the financial industry has become very complex. Interest rates and exchange rates have put the risk management in a rather awkward position. The management of the banking system is not quite attuned with the pressure of the high volume of savings and lending's. The speedy rise of the financial industry ever since the global financial crisis requires a very cautious step towards analyzing its activities and transactions. According to statistics China's Financial Industry had seen $23 trillion in assets by the start of 2013 which were divided into $21 trillion in the banking sector, $76billion in the mutual Funds sector. The insurance sector scored 1.2 trillion where as the securities sector holds $ 275 billion.
The first joint equity bank was formed in 1986 known as the Bank of Communication. This second tier commercial bank was formulated to establish a sense of completion in the sector, and offer better services to the household and businesses. As on 8/0/2013 this bank holds 4.61% of the assets of the CHIX ETF.
China sees a very good flow of investments in its financial sector as four of the top Chinese's banks are listed among the top global banks. It is a moment of pride for the financial sector and a rewarding claim for the financial character portfolios. Foreign investors are attracted towards the exposure delivered by the China Financial Funds. It gives them an opportunity to invest in the liquid Chinese's Bank Stocks and the respective American Derivatives. This stock cuts down on the risk which is associated with its equity investments in China. This fund also takes care of the compliance issues evolved with the foreign investments in the country. These four banks owe their success to the central bank derivatives.
Keeping all factors and analysis apart the major point of concern over here is that the Chinese Banking system does require cautiousness and immediate nursing. China's shadow banking system is in a loss of management because of its extreme scale of credits. A Japanese style of deflation is progressing towards this sector. The shadow banking system requires urgent repair to enable it transparency, a factor required for the smoothness in its funding, which will make the transactions between the buyers and lenders more clear and create a much more clean and transparent picture of the funding system of the economy. In this regard the policies imparted by the government are now more focused on the strengthening of the stock market and people's welfare to enhance the lifestyle, security, spending power and incomes of the people. This is called for a special focus on the urbanization of the economy.
Importantly the countries supply and demand for Credit cards and Master cards is on an enormous outburst of a near 900 million. The outburst suggests that the consumption of commodities and change in lifestyle and spending thrifts is now on a speedy track, aiming for a better tomorrow for the economy.
The short-term investment products have been curbed by China Banking Regulatory Commission (CBRC). There has been $467 billion of outstanding products from the bank at the end of 2012. Some of these investments have been shifted to high -risk individuals who are not easily granted loan from Banks. The government is calling on the banks to produce information about the whereabouts of the funds and the beneficiaries of them as well. Though the CHIX ETF has been criticized for just focusing on 25 stocks it has easily outperformed FXI.
Global X China Financials ETF [CHIX] is true to the Solactive China Financials Index. With an annual operational cost of 0.65%. The IND & COMM BANK OF CHINA, CHINA CONSTRUCTION BANK and BANK OF CHINA LIMITED H make up 31.06% of the China financials fund. Banks constitute of 51.16% of the assets of the Global x china financials and Real Estate, Insurance, Financials, Financial Services constitute of the rest 48.83% of the assets.