LI - CHIQ: Stable Valuations With A Balanced Macro Outlook

2024-07-22 03:03:29 ET

Summary

• Although a diversified portfolio, CHIQ has many high-quality and high-growth stocks to drive returns through earnings.
• Market and economic movement are the primary concerns of near-term performance.
• The overall outlook for CHIQ is fairly balanced considering valuations and the current Chinese economy despite the risks.

Thesis

Global X MSCI China Consumer Discretionary ETF ( CHIQ ) is an equity portfolio focusing on the consumer discretionary sector. It has some high-quality and high-growth holdings with earnings growth being the main return driver while multiples have been stably depressed since 2022. From this period until now, the crisis of the property market and the uncertainty about secular economic growth within China have been heightened. Due to the prolonged period of disappointing performance of both the properties and equities market in China, the overall sentiment has been in a weak and sticky phase where a major paradigm shift is likely needed to reverse the current lacklustre valuations....

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