Chinese Government to Stimulate More Domestic Consumerism
On Friday, China announced it would add liquidity to boost the flagging recovery of the country’s economic system, according to the Wall Street Journal.
While fears of inflation are beginning to relax in the Chinese financial sectors, they are being replaced by concerns that the economy’s recovery is slowing down too rapidly.
Increased liquidity tends to lead to an increase in consumer spending. As such, the KraneShares CICC China Consumer Leaders Index ETF (KBUY) stands to benefit from the move.
China’s Central Bank Intervenes
The People’s Bank of China, China’s central bank, announced that it would be lowering the reserve requirement by half a percent beginning July 15, essentially freeing up $154 billion (1 trillion yuan).
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You Know Where to Go: The Benefits of China-Specific ETFs February 16, 2021
Investors frequently hear about the benefits of tapping the emerging markets consumer theme – one that largely revolves around China. The
KBUY, which is nearly two months old, tracks the CICC China Consumer Leaders Index. That benchmark “consists of the investable universe of publicly traded China-based companies whose primary business or businesses are in the consumption-related industries such as home appliance, food & beverage, apparel & clothing, hotels, restaurants, and duty-free goods,” according to KraneShares.
Some recent data points have shown signs of softness in the world’s second-largest economy, but Beijing is also taking steps to prop up consumption. China has been looking to increase internal consumption to reduce the economy’s sensitivity to exports, and those efforts appear to be paying dividends. While some data points indicate the Chinese economy and consumer spending are s
For almost as long as there s been emerging markets exchange-traded funds, investors have been regaled with tales of consumer spending growth in developing economies.
What To Know: Indeed, incomes and middle classes are on the rise in emerging markets, bolstering the case for consumer-driven investment strategies. Related ETFs are rewarding investors this year as tech-savvy emerging markets consumers embrace e-commerce and online retail in significant fashion.
Of course, China is the primary driver of this growth and a new ETF taps into that theme. The
KraneShares CICC China Consumer Leaders Index ETF (NYSE:KBUY) debuted on Wednesday, adding to a growing lineup of the issuer s China-focused funds.