For Immediate Release
Chicago, IL – February 26, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Global X MSCI China Information Technology ETF CHIK, VanEck Vectors China SME-ChiNext ETF CNXT, KraneShares CSI China Internet Fund KWEB, Global X MSCI China Consumer Discretionary ETF CHIQ and Invesco Golden Dragon China ETF PGJ.
Here are highlights from Monday’s Analyst Blog:
Trump Postpones Tariff Deadline: 5 Chinese ETFs Set to Rally
The nearly one-year long trade spat between the United States and China seems to be coming to an end with the latest round of negotiations. This is especially true as President Donald Trump cited substantial progress in bilateral talks between the world’s two largest economies, including intellectual property protection and technology transfer issues. As such, he has suspended his plan for raising tariff from 10% to 25% on $200 billion worth of Chinese goods after Mar 1 deadline (read: U.S.-China Trade Optimism Boosts These ETFs).
Though the new deadline has not been announced, the news inspired optimism in Chinese stocks, which were hit hard by tariff war last year. The progress in trade talks has been instilling confidence since the start of the year. Additionally, stimulus in China’s economy has also raised the appeal for these stocks. China’s central bank cut its reserve requirement ratio (RRR) for the fifth time early this year and also offered financial institutions $83 billion in liquidity as part of a wider economic stimulus. The bank has signaled more stimulus measures in the near term.
Further, the lifting of some trading curbs as well as deepening reforms in the finance sector has added to the enthusiasm. Moreover, depressed valuations have enticed investors’ to charge up at lower level.
The combination of all these trends have injected around a trillion dollar rally into the Chinese stock market, sending several indices into the bull market territory. The ChiNext Index of small caps and technology stocks entered a bull market on Feb 22. The news of postponing tariff pushed other two major indices - Shanghai Composite index and CSI 300 Index – to the bull territory on Feb. 25. Notably, all the three indices increased more than 5.5% on Trump’s announcement (read: Will the Year of Pig Shower Fortunes on China ETFs?).
Given bullish fundamentals, China stocks are poised to go up further, especially in the wake of Trump’s announcement. As such, investors should definitely tap the opportune moment with the following five ETFs. These funds are hot right now and are expected to continue their sizzling run:
Global X MSCI China Information Technology ETF
This fund targets the information technology sector of the China stock market by tracking the MSCI China Information Technology 10/50 Index. It holds 41 stocks in its basket with each accounting for single-digit allocation, charging 65 bps in annual fees. The ETF has amassed $1.9 million in its asset base while trading in a paltry volume of 1,000 shares per day on average. It has surged 34.4% so far this year (see: all the Emerging Asia Pacific ETFs here).
VanEck Vectors China SME-ChiNext ETF
This fund offers exposure to the largest and most-liquid China A-share stocks listed and trading on the Small and Medium Enterprise (SME) Board and the ChiNext Board of the Shenzhen Stock Exchange by tracking the SME-ChiNext 100 index. It holds 100 stocks in its basket with none accounting for more than 6.2% share. The product is unpopular with AUM of $19.4 million and average daily volume of around 9,000 shares. It charges 65 bps in fees per year and has gained 24.4% this year. CNXT has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
KraneShares CSI China Internet Fund
This product provides concentrated exposure to China’s Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 55 securities in its basket with each accounting for single-digit allocation. The ETF has AUM of $1.9 billion and charges 70 bps in annual fees from investors. Volume is solid as it exchanges around 2.2 million shares in hand per day. KWEB has risen 22.8% so far this year and has a Zacks ETF Rank #3 with a High risk outlook (read: China's 2018 GDP Growth 28-Year Low: ETFs That Lost the Most).
Global X MSCI China Consumer Discretionary ETF
This product offers exposure to the consumer discretionary sector in China by tracking the MSCI China Consumer Discretionary 10/50 Index. It holds 50 securities in its basket with none making up for more than 9.2% share each. The fund has AUM of $137.3 million and charges 65 bps in annual fees. It has gained 22.4% so far this year and has a Zacks ETF Rank #3 with a Medium risk outlook.
Invesco Golden Dragon China ETF
This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the US exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. It holds a basket of 64 stocks with each accounting for less than 8.7% share. The product has AUM of $195 million and trades in average daily volume of 23,000 shares. It charges 70 bps in annual fees and is up 22.1% in the year-to-date timeframe. PGJ has a Zacks ETF Rank #3 with a High risk outlook (read: Best Performing Single-Country ETFs of January).
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT): ETF Research Reports
Global X MSCI China Consumer Discretionary ETF (CHIQ): ETF Research Reports
Invesco Golden Dragon China ETF (PGJ): ETF Research Reports
Global X MSCI China Information Technology ETF (CHIK): ETF Research Reports
KraneShares CSI China Internet ETF (KWEB): ETF Research Reports
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