Global X MSCI China Consumer Discretionary ETF

CHIQ

Market cap $203M

The Global X MSCI China Consumer Discretionary ETF (CHIQ) offers targeted exposure to 58 leading Chinese consumer discretionary companies. CHIQ provides a differentiated China allocation, as the broader MSCI China index is dominated by finance, communications, and tech, with only 31% in consumer stocks. Chinese equities, including CHIQ holdings, trade at a discount to other emerging markets, contrasting with premium valuations in Taiwan and India.

China's Singles' Day shopping frenzy may boost ETFs like CHIQ, KWEB, FDNI and EMQQ as consumer and e-commerce spending surge.

Easing tensions between China and the U.S. may be supportive of markets. Still uncertainty amid plans for Trump to visit China in 2026.

Despite mounting macro headwinds at the start of the year, Chinese equities have continued to deliver positive performance. While near-term flows can provide further upside, the durability for the equity rally will hinge on policy choices ahead.

Getting emerging market exposure is a viable option in the current market environment. That's especially so given the global de-dollarization and prospect of further rate cuts by the Federal Reserve.

SPDR® S&P 500 ETF Trust is favored for short-term gains as China's economic weakness may prompt trade concessions benefiting U.S. equities. Global X MSCI China Consumer Disc ETF is rated a Hold due to constrained Chinese consumer demand and persistent deflationary pressures. SPY offers lower costs and stronger dividend growth, while CHIQ's valuation is attractive but faces near-term economic headwinds in China.

ETFs tied to cannabis, Ethereum and Chinese tech stocks topped last week's winners list. Top performers were KSTR, YOLO, ARKZ, CHIQ and CNXT.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

I maintain my 'buy' rating on CHIQ, citing quality holdings, attractive valuations, and significant upside potential for Chinese equities. Previously, I've discussed that household demand for local equities is weak, which still presents a major opportunity to boost returns and valuations via supportive sentiment and policies. 5 months since my last rating, CHIQ has demonstrated impressive resilience while its relative value to global equities has been becoming more apparent.

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