Recovery in Chinese Real Estate Could Support This ETF

 

The thematic exchange-traded funds (ETFs) specializing in Chinese real estate may benefit from the potential end of China's real estate development crisis. This may also help to counteract global interest rate increases brought on by central banks' attempts to contain inflation.

The value of the land purchases made in September by the top 50 Chinese real estate developers increased by 130.2% month over month, according to a Global Times story. The housing market has shown signs of recovering from its low point, according to industry analysts, thanks to the steady economic recovery and successful government initiatives to promote the healthy development of the real estate sector.

The third batch of land for development was issued in September in ten cities, including Beijing, Shanghai, Shenzhen in the Guangdong Province of South China, and Hangzhou in the Zhejiang Province of East China, according to local news site thepaper.com.

Chinese real estate may have achieved or be on the verge of reaching a bottom, providing opportunities for investors to purchase Chinese real estate at deep discounts. With more supply, it is unquestionably a buyer's market, enabling them to purchase real estate at offers that are focused on value.

The increase in land bids from real estate businesses "comes amid market expectations that China's property market is recovering from the bottom," says Song Ding, a research fellow at the China Development Institute in Shenzhen.

The Global X MSCI China Real Estate ETF provides exposure for ETF investors hoping to play a rebound in the Chinese real estate market (CHIR). CHIR aims to deliver investment outcomes that, before fees and expenses, broadly match the price and yield performance of the MSCI China Real Estate 10/50 Index.

According to the index provider, the underlying index measures the performance of businesses included in the MSCI China Index (the "parent index") and categorized as belonging to the real estate industry. In a nutshell, ETF investors receive the following:

• Exposure with a specific focus: CHIR is a play on China's real estate market, which is the world's second-largest economy by GDP.

• ETF effectiveness: CHIR gives investors access to dozens of real estate firms included in the MSCI China Index with only one trade, giving them a productive way to express a sector opinion on China.

• The index includes all eligible securities as defined by MSCI's Global Investable Market Index Methodology. This includes, among other things, China A, B, and H shares, red chips, P chips, and international listings.