China is home to a multi-faceted, highly diversified capital markets system which focuses on all areas of industry that exist in every business sector.
In economic terms, China has been an exciting country for many years. It is incredibly modern, perhaps even futuristic, and in the first quarter of 2023, recorded a national GDP of $14.8 trillion in just three months, increasing 5.2% year on year. That is very impressive growth in the face of declining economies, high interest rates, national debts and talks of recession in many other developed markets.
China is the world's commercial powerhouse, manufacturing everything for export to every nation in the world; however, it is ringfenced by a centrally planned, government-controlled economic and commercial system that means almost everything is impenetrable from the outside.
There are ways to participate in the exciting nature of investment in Chinese industry, however, and that is via US-administered ETFs (Electronically Traded Funds). FXOpen added 19 new ETFs, tradable as CFDs (Contracts for Difference), some of which are funds which track the performance of specific areas of industry in mainland China.
Here are ten Chinese market-focused ETF CFDs administered by Global X on the New York Stock Exchange (NYSE)'s Arca electronic communication network (ECN) that are now available via the FXOpen’s TickTrader platform:
1: Global X MSCI China Information Technology ETF (CHIK)
This particular ETF is designed to provide investors with exposure to the Chinese information technology sector. It aims to reflect the performance of Chinese companies operating in the information technology industry.
Sector-specific ETFs offer diversification within a particular industry. By trading this particular ETF as a CFD, investors can spread their risk across multiple companies within the Chinese information technology sector rather than investing in individual stocks, which can be more volatile. China has been a focal point for technological advancements and innovation for many years now. Investors interested in participating in the growth of Chinese tech giants, advancements in artificial intelligence, and other technological developments may find this interesting.
2: Global X MSCI China Consumer Staples ETF (CHIS)
The MSCI China Consumer Staples ETF seeks to provide investors with exposure to the Chinese consumer staples sector. Consumer staples are products that are considered essential and tend to have consistent demand regardless of economic conditions, such as food via the supermarket sector, and clothes. Consumer staples are often considered defensive stocks because they provide essential goods and services that consumers need regardless of economic conditions. During economic downturns or market volatility, demand for consumer staples tends to remain more stable. This predictability can be appealing to traders looking for investments with reliable revenue streams.
3: Global X MSCI China Health Care ETF (CHIH)
The Global X MSCI China Health Care ETF provides exposure to the Chinese health care sector, including companies involved in pharmaceuticals, biotechnology, medical equipment, and health care services. Traders interested in the growth potential of the Chinese health care industry may find this of interest.
The health care sector is often associated with innovation and growth opportunities, especially in emerging markets like China. China's ageing population and expanding middle class contribute to increased demand for health care services. As the demand for health care services, pharmaceuticals, and medical advancements increases, traders may seek to capitalise on potential growth within the sector.
4: Global X MSCI China Real Estate ETF (CHIR)
This ETF provides exposure to the Chinese real estate sector, allowing investors to participate in the performance of real estate companies in China. This includes companies involved in property development, real estate investment, and related activities. Investors may trade this particular ETF with the expectation that the Chinese real estate market will experience growth, or some degree of volatility, which has been very much the case across various Chinese real estate firms recently. The Evergrande scenario being a famous one. Factors such as urbanisation, population growth, and increased demand for residential and commercial properties could contribute to the expansion of the real estate sector.
5: Global X MSCI China Communication Services ETF (CHIC)
The MSCI China Communication Services ETF provides exposure to the Chinese communication services sector, including companies involved in telecommunications, media, and other communication-related activities. Investors may be interested in gaining exposure to this sector due to its significance in the modern economy, especially in China, where absolutely every aspect of business and social life is conducted via telecommunications and electronic media.
Traders might be attracted to this fund based on their belief in the growth potential of the Chinese communication services industry. As technology and communication continue to evolve, companies in this sector may benefit from increased demand for services. The nation that invented mobile-only messaging and social/business communication knows more than a thing or two about how to lead the way in terms of internet and electronic communications.
6: Global X MSCI China Energy ETF (CHIE)
Traders might consider global energy trends and their potential impact on China's energy sector. This particular ETF can be a way to align with broader energy trends and geopolitical factors influencing the energy market. The performance of energy companies can be influenced by commodity prices, including the prices of oil and natural gas. Infrastructural developments with relation to the energy sector in China are also quite fascinating. The rate at which Chinese engineering companies can build a power station is phenomenal, and with the current mix of fossil fuel and renewable power, this is a rapidly evolving sector. For example, China leads the way in electric car use, so it is vital to consider where the electricity comes from to power these vehicles.
7: Global X MSCI China Industrials ETF (CHII)
China has been actively involved in infrastructure development projects for several years and it could be said that it is a world leader. Traders may use this ETF to participate in the growth potential associated with China's ongoing investments in infrastructure, including transportation and construction.
Government policies and initiatives in China, particularly those related to industrial development and infrastructure projects, can influence the performance of companies in the industrial sector. Traders may be attracted to this ETF based on expectations of growth in China's manufacturing and production sectors. Economic expansion, infrastructure projects, and increasing industrial activities could positively impact the companies within the ETF.
8: Global X MSCI China Materials ETF (CHIM)
This particular ETF provides exposure to the Chinese materials sector, encompassing companies involved in the production of raw materials, chemicals, metals, mining, and other materials-related activities. China is a global leader in extraction of materials, and has business interests all over the world in which Chinese companies explore and extract raw materials for manufacturing all manner of goods within mainland China for the domestic market and for export globally.
Chinese mining companies extract huge amounts of rare earth materials, ferrous metal, coal, iron ore, gold, and precious gemstones and currently are exploring more ways to extract materials for electric vehicle battery production, such as lithium. It is therefore a burgeoning sector. China is, after all, the world's manufacturing facility, therefore raw materials are always in high demand.
9: Global X China Biotech Innovation ETF (CHB)
This ETF provides exposure to the Chinese biotech sector, allowing investors to participate in the innovation and advancements within the biotechnology and healthcare industries in China. Investors in this fund may look at the growth potential of the Chinese biotech sector. China has been investing significantly in biotechnology research and development, and the sector may present opportunities for companies engaged in drug discovery, development, and healthcare innovation.
Traders might analyse the dynamics of the healthcare and biotech industry in China, considering factors such as regulatory environment, healthcare policies, and technological advancements. CHB can be a way to capitalise on the evolving landscape of the biotech sector in the country. The biotech sector is known for its focus on innovation and research. Traders interested in companies involved in cutting-edge medical research, pharmaceuticals, and healthcare technologies may find it appealing.
10: Global X MSCI China Utilities ETF (CHIU)
China's ongoing infrastructure development and urbanisation could contribute to increased demand for utilities. Over the past few years, it has been possible for Chinese development projects to take just 5 years to build an ultra-modern city of 15 to 20 million residents. Traders may look toward this ETF to gain exposure to companies involved in providing essential services to support infrastructure growth. Utility companies are often regarded as steady and stable, especially in nations such as China which have experienced continued rapid development and the need for expansion of water, electricity, sewerage and energy supply services to new industrial and residential areas.
These 10 ETFs are now available on the TickTrader platform and can be traded immediately.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.