ETFs To Gain On China's Upbeat Exports Data For December

China’s export and import data for December 2019 looks encouraging. In dollar-terms, China’s exports climbed 7.6% in December comparing favorably with the 1.3% decline in November. Meanwhile, imports rose 16.3% in December against a rise of 0.3% in November. Both the metrics beat analysts’ expectations of a year-over-year increase in exports of 3.2% and imports of 9.6% in the same period, per a Reuters’ poll. Notably, trade surplus in December came in at $46.79 billion in comparison to analyst expectation of $48 billion.

However, for 2019, China’s export levels fell 0.5% in U.S. dollar terms as against an increase of 9.9% in 2018. Moreover, imports saw a decline of 2.8% in 2019 in dollar terms (read: After a Solid 2019, 5 China ETFs to Keep Rallying in 2020).

What’s Behind the Numbers?

Trade war with United States has been challenging China’s economic growth. Trade tussles led to a 10.7% decline in the trade value with the United States in 2019. It also reduced United States to being China’s third-largest trading partner, with European Union and the ASEAN region taking the top spots.

Moreover, a subdued domestic demand is still impacting China’s import numbers.

Sino-US Trade Relationship Status

China and United States are prepared to seal the phase one of trade deal on January 15, 2020. It is worth noting here that the nations have started to take the promised steps. The December 2019 import numbers for China reflect increasedpurchases, especially of soybean and pork from the United States. Meanwhile, on Jan 13, 2020, the US treasury Department announced the removal of China from a list of countries labelled as currency manipulators.

It is being believed that the phase-one trade deal will help improve trade conditions around the globe but the relief will be temporary. China will have to grapple with 25% tariffs on $250 billion worth of Chinese industrial goods and components that are used by manufacturers in the United States. The tariff-related issues are expected to be dealt with in the phase two of the trade deal.

ETFs in Focus

Against this backdrop, investors can keep a tab on a few China ETFs like iShares China Large-Cap ETF (TE:FXI) , iShares MSCI China ETF MCHI, Xtrackers Harvest CSI 300 China A-Shares ETF ASHR and Invesco Golden Dragon China ETF PGJ.

FXI

This fund seeks long-term growth by tracking the investment returns, before fees and expenses, of the FTSE China 50 Index. It comprises 50 holdings. The fund’s AUM is $4.77 billion and expense ratio is 0.74%.

MCHI

This fund tracks the MSCI China Index. It comprises 597 holdings. The fund’s AUM is $4.99 billion and expense ratio is 0.59% (read: ETF Winners as US-China Deal Eases Trade Tensions).

ASHR

This fund tracks the CSI 300 Index. It comprises 302 holdings. The fund’s AUM is $2.41 billion and expense ratio is 0.65% (read: Should You Buy China ETFs Now?).

PGJ

This fund follows the NASDAQ Golden Dragon China Index, which offers exposure to the U.S. exchange-listed companies that are headquartered or incorporated in the People’s Republic of China. It holds a basket of 66 stocks. The product has AUM of $213.7 million and charges 70 bps in annual fees.

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