Top Ways to Trade China’s 2023 Recovery

Jan 10, 2023

It may be time to go long Chinese stocks again.

It’s been a rough couple of years for China.  The pandemic coupled with Beijing’s zero-COVID policy slammed its economy. That was on top of brewing U.S. tensions, with the White House barring shipments of key chip technology and other curbs.

However, with China now rolling back its restrictions, and tech issue cooling, it may be time to go long Chinese stocks.  In fact, according to Morgan Stanley, the market is still underappreciating China’s reopening, and the potential for a respectable recovery.  

Nowadays, according to CNN, “China is now focused firmly on growing its economy, following a year of COVID lockdowns that depressed demand and a debt crisis in its mammoth real estate sector. Most economists expect the country’s GDP to rebound in the second quarter of 2023 after a sluggish start.”

Some of the top Chinese stocks to consider are JD.com (JD), Trip.com (TCOM), Nio (NIO), Li Auto (LI), BYD (BYDDF), and Baidu (BIDU) to name a few.  Even copper stocks, like Freeport McMoRan (FCX) could push higher as China reopens and rebuilds.  However, if investors want far more exposure to recovering Chinese stocks, there are also beaten-down ETFs, including:

SPDR S&P China ETF (GXC)

Since November, the GXC ETF ran from about $60 to $86.47.  However, with Chinese stocks regaining momentum, the ETF could push aggressively higher. With an expense ratio of 0.59% some of the ETF’s top holdings include Tencent Holdings, Alibaba, JD.com, Pinduoduo, and Baidu to mention a few.

KraneShares CSI China Internet ETF (KWEB)

KWEB, which tracks the CSI Overseas China Internet Index, ran from about $20 to $34.65 in recent months.  We’d like to see it run to $40, near-term, as China recovers.  With an expense ratio of 0.69%, some of its top holdings include Tencent Holdings, Alibaba Group, JD.com, Netease, and Trip.com to name a few.

Global X Copper Miners ETF (COPX)

Another way to trade the Chinese recovery is with copper stocks, which are also recovering on the reopening of the country.  With an expense ratio of 0.65%, some of the ETFs top holdings include Freeport McMoRan, Southern Copper, BHP Group, and Lundin Mining to name a few.

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