Softer Landing Seen for Chinese Consumers
NEW YORK TheStreet -- The other day the Financial Times gave a rundown of statistics of all the things going right in China, like industrial output up 10% year on year, inflation low at 2% and retail sales were up 14.9%.
The one disappointing number highlighted was exports, which grew at 2.9% versus 11.6% for the same period last year. Perhaps because of the data the Shanghai Composite Index has rallied 6% in the last week after what has previously been a lousy year.
If the recent economic data is the start of better times for Chinese equities, investors wanting to take a clue from the data to establish a position in Chinese equities would probably want to avoid export-related companies. But the retail sales numbers might be making an argument to go back into China via the consumer sector and the Global X Consumer ETF (CHIQ).
At the industry level the fund is heaviest in retail stores at 22% and food companies at 19%. Also featured prominently is the automobile industry with almost 13%. Things like retail and food are very typical for a consumer fund and should offer exposure to companies where there is always demand for the end products regardless of economic conditions.This could be important if the Chinese so-called hard landing ever materializes. The exposure to automobiles could serve to make the fund a little more sensitive to the economic cycle should demand for new cars suffer a serious decline. CHIQ has 40 holdings and has an expense ratio of 0.65%. Unlike many consumer sector funds CHIQ has historically not paid much in the way of dividends. In its history the fund paid a 19-cent dividend two years ago and only 6 cents last year amounting to a yield well below 1%. The fund will declare its 2012 dividend toward the end of the year. There are also funds for other sectors in China but concerns of a hard landing still persist and those other sectors, Global X China Financial ETF ( CHIF), Global X China Industrial ETF (CHII)and Global X China Materials ETF (CHIM) would be more vulnerable to slower growth because demand for products and services from those sectors are usually more aligned with the economy.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV