As Real Estate Prices Soar in China, Get Exposure While It Lasts With CHIR

Global real estate prices continue to rise, including in China, where investors with Exchange Traded Funds (ETFs) like the Global X MSCI China Real Estate ETF (CHIR).

Meanwhile, prices in the Chinese real estate market continue to hit new highs, prompting the government to step in to reverse the trend.

“After years of campaigning to tame house prices, China is stepping up the stakes to break a persistent profit cycle that has made homes increasingly unaffordable,” read a Bloomberg article. “In the past few days, China has hiked mortgage rates in a big city, promised to accelerate the development of government-subsidized rental housing, and looked at everything from developer financing to newly listed property prices to property transfers.”

CHIR endeavors to deliver investment results that are generally in line with the price and return performance of the MSCI China Real Estate 10/50 Index before fees and expenses. The Fund invests at least 80% of its total assets in the securities of the Underlying Index and in ADRs and GDRs based on the securities of the Underlying Index.

The underlying index tracks the performance of companies in the MSCI China Index (the “parent index”) that are allocated to the real estate sector as defined by the index provider. In summary, ETF investors get:

• Targeted engagement: CHIR is a targeted examination of the real estate sector in China – the second largest economy in the world according to GDP.
• ETF Efficiency: In a single trade, CHIR provides access to dozens of real estate companies in the MSCI China Index, providing investors with an efficient tool to express a sector view of China.
• All Share Exposure: The index comprises all eligible securities according to MSCI’s Global Investable Market Index Methodology, including but not limited to Chinese A, B and H shares, red chips, P chips and foreign listings.

Government attempt to control real estate

China’s attempts to contain house prices are similar to measures in education to reduce social inequalities. This practice was more pronounced as China’s economy is growing more slowly than expected after the pandemic.

“China’s real estate sector has been a major source of dissatisfaction and the government is determined to control prices so that it doesn’t lead to social unrest,” said Liao Ming, a founding partner of Prospect Avenue Capital, from Beijing. “The measures reflect the political containments in education as they aim to alleviate public fear of inequality.”

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