Investing in the China Consumer

Today the Chinese government announced they will be targeting 7.5% GDP growth in 2013, down slightly from the 7.8% growth in 2012. I have always been a believer in China and do not get bent out of shape when the growth numbers fluctuate. Whether the growth in 2013 is 7.5% or 8.5%, it is still one of the best growth stories in the world.

The announcement also suggested the country will increase their budget deficit and that more money will be spend on domestic programs that will directly benefit the local Chinese consumer rather than concentrating on infrastructure and exports.

There are 2 ETFs that can give investors exposure to this niche area.

• Global X China Consumer ETF ($CHIQ) - The ETF is composed of 40 stocks mainly in the retail, consumer goods/services, automobiles, and food sectors. The ETF is popping today on the news (up1.9%), but has struggled recently. The ETF is above-average risk due to the lack of diversification.
• EG Shares Emerging Markets Consumer ETF ($ECON) - This is an ETF we have owned for clients for some time and it fits our long-term theme on the continued emergence for emerging market consumer. The ETF has been a top performer, but consolidation lately makes it attractive for long-term investors. The ETF is not a direct play on China because it is not a top five country holding, however if you like the theme in general ECON is the best way to play the emerging market consumer.

Below is the 6-month chart showing the performance of $CHIQ, $ECON, and the iShares Emerging Market ETF ($EEM).