As property prices in China are skyrocketing, watch out for CHIR

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Gglobal property prices continue to rise, including in China, where investors can access exchange-traded funds (ETFs) such as Global X MSCI China Real Estate ETF (CHIR)

Meanwhile, prices in the Chinese property market continue to hit new highs, prompting the government to step in to try to reverse this trend.

“After years of campaigning to lower property prices, China has raised rates to break the steady earnings cycle that has made homes increasingly inaccessible.” Bloomberg article said. “In recent days, China has sharply raised mortgage rates in a major city, has pledged to accelerate the development of government-subsidized rental housing, and has taken steps to tighten control over everything from developer funding and newly exposed housing prices to title transfers.”

CHIR is committed to delivering investment results that broadly correspond to price and yield, excluding fees and costs, as measured by the MSCI China Real Estate 10/50 Index. The fund invests at least 80% of its total assets in securities of the underlying index, as well as in ADRs and GDRs based on securities in the underlying index.

The underlying index tracks the performance of companies in the MSCI China Index (“parent index”), classified in the real estate sector as defined by the index provider. In general, ETF investors receive the following:

  • Target Impact: CHIR is a targeted game in the real estate sector in China, the world’s second largest economy by GDP.
  • ETF Efficiency: In a single transaction, CHIR provides access to dozens of real estate companies in the MSCI China Index, providing investors with a powerful tool for expressing a sectoral view of China.
  • All Shares: The Index includes all eligible securities in accordance with the MSCI Global Investable Market Index methodology, including Chinese A, B and H stocks, red chips, P-chips, and foreign listings, among others.

The government’s attempt to control real estate

China’s attempts to curb property prices are similar to education measures as a way to reduce social inequality. This suppression has been more pronounced as China’s economy has shown slower-than-expected growth since the pandemic.

“China’s real estate sector has been one of the biggest sources of discontent, and the government obsessively controls prices, so it does not lead to social unrest,” said Beijing-based Liao Ming, founding partner of Prospect Avenue Capital. … “These measures resonate with policy constraints on education as they seek to reduce public concerns about inequality.”

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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.

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