To The Moon

A number of foreign giants are bullish on Chinese assets. Among them, JPMorgan Chase upgraded the expectation of earnings per share from the $NetEase(NTES)$ this year and next year, which was respectively 17%, 14%; it also upgraded target price in H shares from 185 HK dollars to 195 HK dollars. Besides, DBS bank in Singapore upgraded ratings of Sinopec Group $SINOPEC CORP(00386)$ (H-shares), $Tsingtao Brewery Company Limited(600600)$ (A-share) to "buy". UBS Global Wealth Management also said that

”as a number of positive initiatives introduced, Chinese stocks are still the most favored allocation in Asia. Chinese stocks are still the most favored configuration of UBS Global Wealth Management in Asia”.

Premier Li Qiang met with U.S. Secretary of Commerce Raimondo and said that,

“China is willing to strengthen dialogue and cooperation with the U.S. in the field of economic and trade, and promote the healthy development of economic and trade relations between the two countries with the hope that the U.S. moving in the same direction with China’s”.

Raimondo said,

“the Biden administration supports China's economic development and improve people's livelihoods, with no intention to curb China's development as well as seek to decouple from China. U.S. is willing to maintain communication with the Chinese side, maintaining the normal U.S.-China economic and trade relations, and promote the stable development of relations between the two countries. The U.S. is willing to strengthen cooperation with China in the areas of artificial intelligence, climate change and the fight against fentanyl”.

Up to Tuesday's close, popular Chinese stocks were up extensively, with the Nasdaq China Golden Dragon Index rising 3.70%. For instance, $Taiwan Semiconductor Manufacturing(TSM)$ rose 1.15%; $Alibaba(BABA)$ rose 1.94% and $Pinduoduo Inc.(PDD)$ rose 15.43% with $JD.com(JD)$ , $NetEase(NTES)$ , $Baidu(BIDU)$ and $Li Auto(LI)$  rising 2.04%,  1.33%, 2.5% and 7.79% respectively. What’s more, Li Auto's sales in August have reached 29,100 units. However, $NIO Inc.(NIO)$  fell 1.27%. Besides, $XPeng Inc.(XPEV)$ rose 3.68%, and Huazhou rose 0.78% with $New Oriental Education & Technology(EDU)$ and $Luckin Coffee Inc.(LKNCY)$  rise 1.55% and 1.4% respectively.

If you're optimistic about the potential for a rebound in Chinese assets, it may be wise to bet on ETFs focusing on Chinese stocks, including $iShares MSCI China ETF(MCHI)$ , $CSI China Internet ETF(KWEB)$ , $iShares China Large-Cap ETF(FXI)$ and $X-trackers Harvest CSI 300 China A-Shares Fund(ASHR)$ .

$iShares MSCI China ETF(MCHI)$

Launched by BlackRock, Inc. ( BLK ), MCHI invests in a diversified sector of the Chinese public equity market. The fund seeks to track the performance of the MSCI China Index by using representative sampling techniques.

With $6.14 billion in assets under management, MCHI's largest holdings include Alibaba Group Holding Ltd (BBA) with a weighting of 13.11%, $Tencent Holding Ltd.(TCEHY)$ with 12.58%, and $MEITUAN-W(03690)$ with 3.84%. A total of 601 shares are currently held. Over the past three months, the ETF has seen $197.44 million in flows. Moreover, its 0.59% expense ratio is cheaper compared to the category average of 0.63%.

MCHI pays a $0.78 annual dividend, which is a 1.09% dividend yield at the current share price. Its four-year average dividend yield is 1.39%. Totally, the fund gained 1.7% last year.

$CSI China Internet ETF(KWEB)$

KWEB is the only ETF that offers a single exposure to Chinese software and information technology stocks. The fund invests in companies operating in the software& services, IT services, Internet services and infrastructure, and application software sectors. The fund's investment universe is comprised of a total of 2,000 companies, including TCEHY and TCEHY.

TCEHY has an 11.19% stake in the fund, followed by Alibaba (10.42%) and Meituan-Dianping (7.90%.) KWEB manages $4.43 billion in assets and holds a total of 52 stocks. Its fund flow for the past month was $1.3 billion. The fund's expense ratio is 0.76%, compared to the average expense ratio of 0.63% in this category .

The ETF pays an annual dividend of $0.22, which yields 0.42% at current prices. Its four-year average dividend yield is 1.03%. Additionally, KWEB's dividend has grown at a rate of 31.8% per year over the past five years.

$iShares China Large-Cap ETF(FXI)$

FXI is one of the most popular ETFs for Chinese stocks, aiming to track the performance of the FTSE China 50 Index. The fund focuses on the financial and technology services sector, which makes up more than 50% of the portfolio.

The fund has $4.35 billion in assets under management. Its major holdings include Alibaba (9.35% stake), TCEHY (8.12% stake) and Meituan (7.71% stake). There are currently 52 holdings. Over the past three months, the ETF has seen $612.54 million in flows. FXI has an expense ratio of 0.74%, compared to the category average of 0.63%.

The fund pays a $0.83 annual dividend, which yields 2.01% at the current share price.FXI's average four-year dividend yield is 2.55%.

The fund has $4.35 billion in assets under management. Its major holdings include Alibaba (9.35% stake), TCEHY (8.12% stake) and Meituan (7.71% stake). There are currently 52 holdings. Over the past three months, the ETF has seen $612.54 million in flows. FXI has an expense ratio of 0.74%, compared to the category average of 0.63%.

The fund pays a $0.83 annual dividend, which yields 2.01% at the current share price. FXI's average four-year dividend yield is 2.55%.

$X-trackers Harvest CSI 300 China A-Shares Fund(ASHR)$

ASHR is the first ETF listed in the U.S. that invests directly in the China A-share market. It seeks to track the performance of the CSI 300 Index and typically invests at least 80% of its total assets in the securities of the issuers comprising the underlying Index.

ASHR has $2.44 billion in assets under management and its major holdings include $Kweichow Moutai Co.,Ltd.(600519)$ (5.54% weighting), $China Merchants Bank Co., Ltd.(600036)$ (2.95% weighting) and $Ping An Insurance (Group) Company of China Ltd.(PNGAY)$ for 2.93%. It currently holds 292 shares. Over the past three months, the ETF has seen flows of $169.74 million. Additionally, it has an expense ratio of 0.65%, compared to the average expense ratio of 0.63% in this category .

ASHR pays an annual dividend of $0.32, which represents a dividend yield of 0.85% at the current share price. Its four-year average dividend yield is 0.93%. In addition, its dividend has grown at a compound annual growth rate of 7.4% over the past three years. The fund rose 16.5% last year and 7.6% over the past nine months.

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