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Five liquid ETFs for those looking to invest in China

Over the last couple of months, Chinese companies have been under significant pressure - several factors contribute to this. The chief among them is that the local regulators are tightening scrutiny on technology companies.

Among those affected have been:

● Giants with huge monopolistic influence - Alibaba, Baidu, Tencent, JD.Com.

● EdTech companies - TAL Education, New Oriental Education, Gaotu Techedu.

● Gaming companies - Tencent, NetEase.

Alongside this, companies that have recently IPOed on US stock exchanges, or are about to do so, are also facing problems. The most prominent example is Didi - the Chinese taxi aggregator. As a result, companies in related sectors and businesses have also come under pressure, as investors have begun to partially reduce their positions against such a negative backdrop.

The restrictions may create some challenges for the Chinese technology companies in the short term, but it is unclear how severe they will be. It is highly likely that, over time, corporations will be able to adapt to the new environment and continue to build their influence. This is especially true for technology giants with impressive capital and high levels of consumer loyalty.

The current drawdown in the Chinese market could therefore be an excellent opportunity to acquire or increase the share of the Chinese issuers in your portfolio. In this case, a viable investment option is to purchase the ETFs, which allocate their funds among the Chinese companies and, through diversification, significantly reduce the risk. We have made a selection of five of the largest and most popular ETFs.

Before buying, we recommend that you read the key information documents (KIDs) of the funds.


KraneShares CSI China Internet ETF

Key facts:

Ticker: KWEB.US.

Index - CSI Overseas China Internet .

Current price - $48.8.

Assets under management, AUM - $7.38 billion.

Dividend yield - 0.44%.

Expense Ratio - 0.76%.

The number of names in the ETF is 52.

Companies with the largest allocation to ETFs:

● Tencent Holdings Ltd. - 10,64%.

● Alibaba Group Holding Ltd. - 8,91%.

● JD.com - 8.35%.

● Pinduoduo - 8.12%.

● Meituan - 8.09%.

The average P/E Ratio for the portfolio is 30.3x.

The ETF's year-to-date return is (-36.81%).

Read more about this ETF at KID.


iShares MSCI China ETF

Key facts:

Ticker: MCHI.US.

Index Tracked - MSCI China.

Current price - $68.7.

Assets under management, AUM - $6.19 billion.

Dividend yield - 1.11%.

Expense Ratio - 0.59%.

The number of names in the ETF is 613.

Companies with the largest allocation to ETFs:

● Tencent Holdings Ltd. - 12,44%.

● Alibaba Group Holding Ltd. - 11,05%.

● Meituan - 4.53%.

● China Construction Bank Corporation - 2.52%.

● JD.com - 2.45%.

The average P/E Ratio for the portfolio is 17.2x.

The ETF's year-to-date return is (-14.17%).

Read more about this ETF at KID.


iShares China Large-Cap ETF

Key facts:

Ticker: FXI.US.

Index Tracked - FTSE China 50 Net Tax USD..

Current price is $39.7.

Assets under management, AUM - $4.79 billion.

Dividend yield - 2.07%.

Expense Ratio - 0.74%.

The number of names in the ETF is 52.

Companies with the largest allocation to ETFs:

● Meituan - 8.17%.

● Tencent Holdings Ltd. – 8.08%.

● Alibaba Group Holding Ltd. – 7.90%.

● China Construction Bank Corporation - 6.24%.

● JD.com - 5.20%.

The average P/E Ratio for the portfolio is 14.9x.

The ETF's year-to-date return is (-13.01%).

Read more about this ETF at KID.


Xtrackers Harvest CSI 300 China A-Shares ETF

Key facts:

Ticker: ASHR.US.

Index Tracked - CSI 300 Index..

Current price - $37.9.

Assets under management, AUM - $2.4 billion.

Dividend yield - 0.84%.

Expense Ratio - 0.65%.

The number of names in the ETF is 292.

Companies with the largest allocation to ETFs:

● Kweichow Moutai Co. - 5.25%.

● China Merchants Bank Co - 3.28%.

● Ping An Insurance (Group) Company of China - 2.72%.

● Wuliangye Yibin Co - 2.02%.

● LONGi Green Energy Technology Co - 1.82%.

The average P/E Ratio of the portfolio is 18.0x.

The ETF's year-to-date return is (-4.02%).

Read more about this ETF at KID.


SPDR S&P China ETF

Key facts:

Ticker: GXC.US.

Index Tracked - S&P China BMI Index..

Current price is $112.6.

Assets under management, AUM - $1.76 billion.

Dividend yield - 1.11%.

Expense Ratio - 0.59%.

The number of names in the ETF is 825.

Companies with the largest allocation to ETFs:

● Tencent Holdings Ltd. - 11,55%.

● Alibaba Group Holding Ltd. - 9,48%.

● Meituan - 4.15%.

● JD.com - 2.28%.

● China Construction Bank Corporation - 2.27%.

The average P/E Ratio for the portfolio is 13.3x.

The ETF's year-to-date return is (-12.33%).

Read more about this ETF at KID.


How to Buy ETFs?

If you don't have an investment account yet, open it now: this can be done online, in just 10 minutes. All you need to do is fill out a short form and verify your account.

After opening an account, you can buy ETFs in either of the following ways:

Freedom24 Web Platform: In the Web Terminal section, type in the search box, and select the appropriate ETF in the results. Open a secure session in the trading window on the right, select the number of securities you want to buy, and click Buy.

Freedom24 iPhone or Android App: Go to the Price screen and tab the search icon in the top right corner. In the search dialog that will show up, type and select the appropriate ETF in the results. You will then see the ETF in the market watch; tap it and go to the Order tab in the dialog that shows up. Specify the number of securities you want to buy and click Buy.


Go to Freedom24 web platform >>


*Additional information is available upon request. Investment in securities and other financial instruments always involves risks of capital loss. The Client should make himself aware at his own accord, including to familiarize himself with Risk Disclosure Notice. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Commissions, fees or other charges can diminish financial returns. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and do not constitute an investment advice service. The recipient of this report must make their own independent decisions regarding any securities or financial instruments mentioned herein. Information has been obtained from sources believed to be reliable by Freedom Finance Cyprus Ltd or its affiliates and/or subsidiaries (collectively Freedom Finance). Freedom Finance do not warrant its completeness or accuracy except with respect to any disclosures relative to the Freedom Finance and/or its affiliates and the analyst’s involvement with the issuer that is the subject of the research. All pricing is indicative as of the close of market for the securities discussed, unless otherwise stated.