Will China rebound in 2023?
$KraneShares CSI China Internet ETF(KWEB.US$ As China relaxes its strict COVID-19 policies, many analysts and economists expect the economy to recover next year.
Tressis Gestión SGIIC chief economist Daniel Lacalle (Daniel Lacalle) predicted on Tuesday on Squawk Box of the US Consumer News and Business Channel (CNBC) that the reopening of the Chinese economy will boost growth in 2023, although he still expects that global growth will be quite weak compared to the years before the outbreak of the pandemic.
On December 27, after news of a reversal in China came out, the price of gold soared to its highest level since late June.
It's unclear if Lacalle's predictions are likely to come true, simply because the country has taken a big step from a zero-COVID policy. In fact, a sudden reversal of its policies could present some serious problems.
China has yet to achieve — and vigorously pursue — high levels of vaccination against the virus among its population, and the recent relaxation of zero-out policies has led to a new wave of patients in the country's hospitals.
According to recent reports from The New York Times and other media, its elderly population has been hit the hardest. Most ominously, there are concerns that China may see COVID-related deaths reach levels in the early stages of the outbreak in more developed markets.
ETF performance
The performance of Chinese ETFs this year has been mixed. This MSCI China Energy ETF (CHIE) is the only positive regional fund that is not a gear fund so far this year. The company manages less than $10 million in assets and is up 24.7% year to date, mainly because it invests in energy stocks.
Consider that although the $6.7 billion KraneShares China Internet ETF (KWEB) performed the worst earlier this year, it is now one of the five best performing ETFs covering China. The fund fell 42% earlier this year, but is now only down 18%. According to ETF data, so far this year, the fund has had an inflow of about 1.7 billion US dollars because investors refuse to lose confidence in the fund's premise.
But if China enters a period similar to the early days of the pandemic in developed markets, this persistence may pay off. While its citizens can move more freely, a high death rate may prevent them from taking advantage of this, causing people to flock to online entertainment and services.
The $7.6 billion Morgan Stanley Capital International China ETF (MCHI) has, however, declined by 24% so far this year, even surpassing KWEB. But it has also seen greater inflows, receiving $3.8 billion in 2022, close to 50% of its current assets.
The $2 billion Harvest Shanghai and Shenzhen 300 China A-share ETF (ASHR) declined even more, falling 29% in 2022, but even the fund had positive inflows, even if it was only about $13 million.
Obviously, some ETF investors are betting on a rebound in China, but from a human perspective, the long-awaited reopening has come at a heavy cost. It's unclear whether the desired growth story will unfold in 2023.
On December 27, after news of a reversal in China came out, the price of gold soared to its highest level since late June.
It's unclear if Lacalle's predictions are likely to come true, simply because the country has taken a big step from a zero-COVID policy. In fact, a sudden reversal of its policies could present some serious problems.
China has yet to achieve — and vigorously pursue — high levels of vaccination against the virus among its population, and the recent relaxation of zero-out policies has led to a new wave of patients in the country's hospitals.
According to recent reports from The New York Times and other media, its elderly population has been hit the hardest. Most ominously, there are concerns that China may see COVID-related deaths reach levels in the early stages of the outbreak in more developed markets.
ETF performance
The performance of Chinese ETFs this year has been mixed. This MSCI China Energy ETF (CHIE) is the only positive regional fund that is not a gear fund so far this year. The company manages less than $10 million in assets and is up 24.7% year to date, mainly because it invests in energy stocks.
Consider that although the $6.7 billion KraneShares China Internet ETF (KWEB) performed the worst earlier this year, it is now one of the five best performing ETFs covering China. The fund fell 42% earlier this year, but is now only down 18%. According to ETF data, so far this year, the fund has had an inflow of about 1.7 billion US dollars because investors refuse to lose confidence in the fund's premise.
But if China enters a period similar to the early days of the pandemic in developed markets, this persistence may pay off. While its citizens can move more freely, a high death rate may prevent them from taking advantage of this, causing people to flock to online entertainment and services.
The $7.6 billion Morgan Stanley Capital International China ETF (MCHI) has, however, declined by 24% so far this year, even surpassing KWEB. But it has also seen greater inflows, receiving $3.8 billion in 2022, close to 50% of its current assets.
The $2 billion Harvest Shanghai and Shenzhen 300 China A-share ETF (ASHR) declined even more, falling 29% in 2022, but even the fund had positive inflows, even if it was only about $13 million.
Obviously, some ETF investors are betting on a rebound in China, but from a human perspective, the long-awaited reopening has come at a heavy cost. It's unclear whether the desired growth story will unfold in 2023.
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