China Sector Report: Q3 2020

The Global X China Sector Report: Q3 2020 can be viewed here. The report provides macro-level and sector-specific insights across the eleven major economic sectors in China’s equity markets.

In the third quarter of 2020, China’s economic activity expanded from the manufacturing sector into service and retail-driven sectors as lockdowns eased and consumer confidence rose. After many were able to return work, and others continued to adjust to working from home, consumers began to spend more with their incomes and confidence restored. China’s restrained reopening has meant that many Chinese workers continue to live much of their lives online while demand for discretionary good continues to recover. While many analysts have reduced their forecasts for China’s growth this year because of the bumpy recovery, China is still the only major economy forecasted to exhibit positive growth in 2020, contributing to strong equity market performance.

Within China, all of the eleven major economic sectors in China generated positive equity returns in Q3 2020, with the exception of the Financials sector. This is consistent with Q2 performance, when all but the Energy sector generated positive returns. But both Q3 and Q2 stood in stark contrast to Q1, when all 11 sectors plunged amid the initial COVID-19 outbreak. In terms of contributions to overall returns in the MSCI China Index, the Consumer Discretionary sector played the greatest role, as China’s economic recovery encouraged consumption of goods and services.

(Click on image to enlarge)

Q3 2020 China Performance

Source: Bloomberg as of Sep 30, 2020

Performance shown is past performance, based on the NAVs of the underlying sector ETFs, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. To view standard performance of each of the funds, please click on the links available under “Related ETFs” below this post.

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Disclosure: The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate ...

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