Lockdowns don’t stop Chinese consumers from spending

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A persistent trend in the United States is that social distancing measures have not stopped consumers from spending. This is certainly the case for the second-largest economy, as Chinese consumers are also following this trend under renewed lockdown measures in the face of rising COVID-19 cases.

Consumers are flocking online to make the majority of their purchases, based on the performance of online retailers. This was especially the case for one of China’s online retail giants.

E-commerce giant Alibaba on Thursday reported better-than-expected earnings and sales for its latest quarter. CNN reported. “Alibaba’s shares (BABA) rose nearly 15% by late morning after the company said revenue rose 9% from a year ago, beating analysts’ forecasts. Alibaba said the strength was due to strong demand for online and mobile shopping as well as a 12% increase in sales from its massive Alibaba Cloud unit.

CNN also noted that consumer habits are shifting from needs to more essential products in terms of online shopping. However, when the containment measures are lifted, more discretionary spending should take place as part of a recovery.

That, of course, if global inflation has anything to say about it. There is already talk in the U.S. of whether excessive tightening could trigger a recession, but if the central bank (and others to follow) can get inflation under control, renewed consumer confidence could lead to more discretionary spending. .

Roll the dice

Investors looking to roll the dice on future growth can look at the Global X MSCI China Consumer Discretionary ETF (CHIQ). CHIQ’s underlying index “incorporates all eligible securities under MSCI’s Global Investable Market Index methodology, including China A-, B-, and H-stocks, red-chips, P-chips, and foreign listings. , among others”. according to Global X.

CHIQ offers investors:

  • Targeted Exposure: CHIQ is a targeted bet on the consumer discretionary sector in China, the world’s second largest economy by GDP.
  • ETF Efficiency: In a single transaction, CHIQ provides access to dozens of consumer discretionary companies within the MSCI China Index, providing investors with an efficient vehicle to express a sector view of China.
  • All-equity exposure: The index incorporates all eligible securities under MSCI’s World Investable Markets Index methodology, including China A-, B-, and H-shares, Red Tokens, P-Tokens, and foreign listings , among others.

For more news, insights and strategy, visit the Thematic investment channel.

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