China Sector Report: Q2 2019

The Global X Q2 China Sector Report can be viewed here. The report provides macro-level and sector-specific insights across the eleven major economic sectors in China’s equity markets.


Although Financials, Industrials, Utilities, and Consumer Discretionary outperformed the Broad China equity benchmark, the MSCI China Index, only Consumer Staples provided positive returns in the quarter. Despite largely negative returns over the quarter, 10 out of 11 sectors turned in positive June performances, showing a broad rebound as trade tensions eased.

The Consumer Discretionary sector had the sharpest rebound in June, outperforming all other sectors during the month. The sector was supported by accelerating retail sales in June, which beat expectations as the auto industry saw passenger car sales increase for the first time in over a year. Confronted with the challenges ride-hailing apps and slower GDP growth, auto retailers began offering discounts, while government policies focused on easing licensing schemes and stimulating credit.

Despite the more recent rebound in the Consumer Discretionary sector, China’s Consumer Staples sector was the top performing sector for the duration of Q2, driven partially by African swine flu supporting higher pork prices.

While Financials contributed nearly as much as Consumer Staples to the MSCI China’s overall performance, the sector only narrowly outperformed the benchmark after news broke that national authorities had seized a large regional bank because of ongoing regionally-focused credit concerns.

Two of the hardest hit sectors in Q2 were the Communication Services and Information Technology sectors, which were negatively affected by resurfaced trade tensions. These tensions put them among the most volatile sectors in China.

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