China on High Growth Trajectory: ETFs That Are in Momentum
China's economy showed a significant increase in the first quarter of 2023, while many developed countries are experiencing slower growth as their central banks are hiking rates to curb inflation. According to China's National Bureau of Statistics, the country's gross domestic product (GDP) grew by 4.5% in Q1, which is the highest growth rate since the same period last year, when the economy grew by 4.8%. This growth rate is also better than 4% which was forecast in a Reuters’ poll. Additionally, the economy grew 2.2% sequentially.
The growth rate was much-awaited as Q1 of 2023 marked the first quarter after the lifting of most of China's strict COVID restrictions that were in effect for almost three years. Year-to-date fixed asset investment was weaker than expected and rose 5.1% year over year, as growth was sluggish in infrastructure and manufacturing investment.
Upbeat Growth for Full-Year 2023?
The Chinese economy grew 3% in 2022, less than Beijing’s official target of around 5.5% set in March 2022. The government had set a conservative growth target of approximately 5% for 2023 last month. Goldman Sachs said China’s first-quarter growth of 4.5% boosted the firm’s full-year outlook for the country’s economy to grow 6%, as quoted on CNBC.
JPMorgan hiked its 2023 growth outlook to 6.4%, up from a previous forecast of 6%. Citi raised its forecast to 6.1% from its previous forecast of 5.7%, citing the Chinese economy’s improvement toward the post-Covid recovery helped by consumption and services, as quoted on CNBC.
While most analysts polled by Reuters see the central bank’s steady stance on the benchmark lending rate, some believe the People’s Bank of China could slightly slash its one-year loan prime rate if China’s inflation cools further, as quoted on CNBC. China’s consumer inflation touched an 18-month low earlier this month.
China’s economy is likely to see a spell of improvement from government stimulus later in the year, NF Trinity’s managing director Helen Zhu told CNBC’s “Street Signs Asia” shortly after the data GDP data release, as quoted on CNBC. She expects more than a 5% growth rate for Q2 of 2023.
ING’s Chief China economist Iris Pang also expects China’s government to inject additional stimulus to boost its infrastructure investments and consumption and most of this extra investment will likely be on “building metro lines and increasing the number of 5G towers as these are already in the plan for this year.”
China ETFs in Focus
Against this backdrop, below, we highlight a few ETFs whose high momentum over the past month could continue in the coming days.
KraneShares CICC China 5G & Semiconductor Index ETF KFVG – Up 13.2% Past Month (as of Apr 17, 2023)
Global X MSCI China Real Estate ETF CHIR – Up 11.8%
KraneShares SSE Star Market 50 Index ETF KSTR – Up 10.3%
Global X MSCI China Communication Services ETF CHIC – Up 9.4%
Global X MSCI China Health Care ETF CHIH – Up 7.1%
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Global X MSCI China Communication Services ETF (CHIC): ETF Research Reports
Global X MSCI China Health Care ETF (CHIH): ETF Research Reports
Global X MSCI China Real Estate ETF (CHIR): ETF Research Reports
KraneShares CICC China 5G and Semiconductor Index ETF (KFVG): ETF Research Reports
KraneShares SSE STAR Market 50 Index ETF (KSTR): ETF Research Reports