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Sales Trader Note - China Consumer ETFs
Chun Fei Lin
Sales Trader
Summary: As China reopening from Covid-zero and continued moves to ease policy, many investors are bullish on the Chinese stocks for 2023. Chinese equities are at attractively cheap valuation. With China loosening Covid curbs, more malls and restaurants reopened and it creates positive impact on the consumer staples and consumer discretionary industries.
As China reopening from Covid-zero and continued moves to ease policy, many investors are bullish on the Chinese stocks for 2023. MSCI China Index has rallied 34% from the low on 31 October after China reopening hopes. Many investors are looking at Chinese equities as they are sitting at attractively cheap valuation. With China loosening Covid curbs, more malls and restaurants reopened and it creates positive impact on the consumer staples and consumer discretionary industries.
Global X MSCI China Consumer Staples ETF (CHIS)
The ETF invests in large and mid capitalization segments of the MSCI China Index that are classified in the Consumer Staples Sector as per the Global Industry Classification System (GICS). It tracks the performance of the MSCI China Consumer Staples 10/50 Index. The index includes China A, B and H shares, Red chips, P chips and foreign listings. The ETF has a market cap of USD 21.8 million, average P/E of 25.83 and expense ratio of 0.65%. Top 5 holdings are Kweichou Moutai, China Resources, China Mengniu Dairy, Nongfu Spring and Tsingtao Brewery, which makes up 40.58% of the total net assets. It has high exposure in beverage and food industries, 53.34% exposure in beverages industry and 25.87% in food industry. The ETF provides semi-annual distribution, 0.94% yield per year.
Global X MSCI China Consumer Discretionary ETF (CHIQ)
The ETF targets play on the Consumer Discretionary Sector in China and tracks the MSCI China Consumer Discretionary 10/50 Index. The ETF has a market cap of USD 289.6 million with an average P/E of 42.31 which is relative high compared to the MSCI China Index average P/E of 11.1 as it consists of more e-commerce stocks in the ETF. The top 5 holdings make up 38.44% of the total net assets, which consists of Meituan, Alibaba, JD.com, Pinduoduo and Yum Chin. The ETF has 40.62% exposure in internet industry, 21.01% exposure in retail industry and 20.07% in auto manufacturers.
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