China Exposure

Macro Perspectives: Thu 11 Feb 2021

We talked about the value in European stocks, relative to a U.S. stock market that hangs around record highs. Another foreign market we've been talking about is China - a big winner in the recent U.S. election.

Under the new U.S. administration, they will go back to the business that got them so close (pre-Trump) to becoming the global economic superpower - ramping up the global supply chain and manipulating the currency to ensure they maintain global dominance in exporting.

With that, as you can see in the chart below, the Shanghai Composite is breaking out, maybe to new five-year highs this week...

No surprise, Chinese ETF assets are growing at a rapid rate. According to ETF.com, there are over 1,300 U.S. ETFs (trading in U.S. securities) controlling $4.3 trillion in assets - clearly some of that consists of big Chinese ADRs (Baba, JD.com, etc). But there are only 54 China-specific ETF traded on U.S. markets, representing just $28 billion in assets.

Safe to assume there will be major growth there.

The most recent China specific ETF launch is said to be the Nasdaq (100) of China (high tech and biotech), Kraneshares SSE Star Market 50 Index (symbol KSTR) – small today (in aum), but likely to grow aggressively over the next few years.