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ETFs to Gain as Sino-US Trade Talks Progress

Sweta Jaiswal, FRM

China’s recent announcement that major sections of the text for the partial accord with the United States have been “basically completed” has cheered investors. The announcement came after a conference call between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and China’s Vice Premier Liu He.

Per the announcement, the countries have agreed upon the regulatory system in the United States for purchasing squid products and cooked poultry from China. Moreover, Beijing has agreed to implement the public health information systems for meat products and eliminate restrictions on poultry meat imports from America (read: ETFs in Focus as China's GDP Nears 30-Year Low Level).

‘Phase 1’ Deal in Details

It is being believed that the preliminary agreement addresses the softer issues between the United States and China. The deal will require Beijing to purchase American farm products valuing around $40 billion to $50 billion annually. The partial accord will also fortify China’s protection for American intellectual property and grant increased access to Chinese market. Mr. Lighthizer informed that the deal necessitates Beijing’s implementation of certain structural changes in screening methodology for imported food and granting approvals to new genetically modified products. He said that the changes will make it easier for increased amounts of American farm products to be exported to China (read: Dividend Growth ETFs to Sail Through Trade Uncertainty).

On the currency front as well, the talks have been encouraging. In exchange for United States considering eliminating China’s name on the currency manipulators list, Beijing has agreed to increase transparency in its currency policy.

ETF Winners

US Agricultural/Livestock ETFs

The U.S. agricultural sector has seen the worst due to the trade war. However, the latest developments might bring some relief to the sector. Thus, investors can keep an eye on ETFs like  Invesco DB Agriculture Fund DBA, Teucrium Wheat Fund WEAT, ELEMENTS Linked to the Rogers International Commodity Index - Agriculture Total Return RJA, iPath Series B Bloomberg Grains Subindex Total Return ETN JJG and iPath Series B Bloomberg Livestock Subindex Total Return ETN COW (see: all the Agricultural ETFs here).

Semiconductor ETFs

President of the Semiconductor Industry Association, John Neuffer, regards the deal as “welcome news” for the industry. Let’s take a look at some of the semiconductor ETFs that can gain from the cooling down of trade tensions. iShares PHLX Semiconductor ETF SOXX and VanEck Vectors Semiconductor ETF SMH can be given a thought. Investors can also look at leveraged ETFs like Direxion Daily Semiconductors Bull 3x Shares SOXL and ProShares Ultra Semiconductors USD (read: Time to Buy the Dip in Semiconductor ETFs?).

Growth ETFs

Growth stocks are high in quality and are likely to witness revenue and earnings growth at a faster rate than the industry average. As such, growth funds tend to outperform during an uptrend. While there are plenty of options in the growth ETF world, we have highlighted five funds that offer broad-based exposure to the U.S. stock market like Vanguard Growth ETF VUG , Schwab U.S. Large-Cap Growth ETF SCHG, iShares Core S&P U.S. Growth ETF IUSG, SPDR S&P 500 Growth ETF SPYG and Vanguard Mega Cap Growth ETF MGK .

China ETFs

The deal can be seen as the beginning of cordial ties between China and the United States. In such a scenario, investors can keep a tab on a few China ETFs like iShares China Large-Cap ETF FXI, iShares MSCI China ETF MCHI, Xtrackers Harvest CSI 300 China A-Shares ETF ASHR and Invesco Golden Dragon China ETF PGJ.

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iShares PHLX Semiconductor ETF (SOXX): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
Schwab U.S. Large-Cap Growth ETF (SCHG): ETF Research Reports
Teucrium Wheat Fund (WEAT): ETF Research Reports
iShares MSCI China ETF (MCHI): ETF Research Reports
iShares Core S&P U.S. Growth ETF (IUSG): ETF Research Reports
Invesco DB Agriculture Fund (DBA): ETF Research Reports
Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports
iShares China Large-Cap ETF (FXI): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
Invesco Golden Dragon China ETF (PGJ): ETF Research Reports
Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR): ETF Research Reports
SPDR Portfolio S&P 500 Growth ETF (SPYG): ETF Research Reports
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
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