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Well, China is considering approving $1.4 trillion in extra debt in the next few years to prop up its economy, according to a Reuters report. China's economy has largely failed to bounce back post-pandemic and officials have announced and are weighing a number of stimulus efforts, including this latest debt proposal. Chinese stocks have picked up on the back of these moves. The benchmark CSI 300 Index is now up 13% this year. So is now the time to invest in China ahead of future stimulus plans? For more, we have Ben Harburg, CVY Greater China Growth ETF Portfolio Manager as part of this week's ETF report brought to you by Invesco QQQ. Great to have you here with us. So let's start there. Is is this the time to look at this region, look at China specifically and say, okay, if there are more stimulus efforts coming forth, then I need to allocate at least a portion of my portfolio to that?

There are two catalyzing events that we can look forward to in the very immediate future that would affect Chinese uh equity markets significantly. One is uh the upcoming 4th to 8th November NPC, so National Party Congress meeting, where they're going to roll out, or at least um uh define a lot of their economic strategy for the coming year, and of course the US elections on November 5th. So it's going to be a gangbuster week ahead. Our view is that uh now is a good time to enter the market for two reasons. So one, the Chinese are continuing to stimulate the market. You're hearing incremental rollouts kind of week by week to coax uh the bears out of their dens and get them to buy on the High Street and invest in the public markets. I think you will still see continued debt um uh policies. Uh but I think it's also the Trump election, or the the the US election that will uh catalyze a lot of it. Were Trump to be elected, I think you could see actually significant improvements in the Chinese economy because there really is a deal to be had between the United States on all areas of trade um and IP. And I believe that this time around the Chinese would come to the table to do that deal and that would actually normalize relations and and make it much more pragmatic relationship than we've experienced over the last four years.

And so with that in mind, Ben, as we're thinking about the ways to invest as well, should investors be looking at specific companies and and stock picking, or is there a kind of a concerted approach and looking at a basket of securities, ETFs, for instance, that would give them exposure to specific sectors that are set to benefit the most?

Obviously the approach we've taken is to invest on the public side through our ETF CGRO. Uh the ETF aims to take a basket of about 30 to 40 names that are high growth. We actively trade them day by day, moving in and out of A shares, H shares and ADRs, in an effort to grab as much of the upside as possible as the market evolves very rapidly as a result of these stimulus measures, but again in in areas that we see where there's still a lot of room to run. So Chinese technology companies that are going global, uh domestic brands and domestic consumption drivers, domestic travel, fully integrated supply chains, where China is starting to lead the world in the fifth Industrial Revolution, be it electric vehicles, handsets, solar. Uh so all areas that we see huge opportunity for upside, but in a diversified and risk-adjusted way.

And so with this in mind, as you're looking at some of those areas where there's set to be a longer tail, how are you evaluating some of those opportunities and where investors could be looking for those returns, and is there a good rule of thumb for what type of returns you should be expecting when there's this amount of stimulus that's being put into the system in the region?

Well, the first thing we're doing is we're looking for screaming buys. So companies that are irrationally and unfundamentally undervalued. So a company like Pinduoduo, for instance, which was trading at 9 to 12x PE, but growing at 80% a year relative to uh its peer comp, Amazon growing at about 20%, but but uh valued on a multiple 45x. So, uh you know, these types of mismatches and valuation, companies trading, uh you know, with the amount of cash they have in their balance sheet, there's just so much irrationality in the way the Chinese market was viewed, largely for geopolitical reasons, not for kind of fundamental economic reasons. And then we're looking at those sectors that again, we see huge market share growth. So China, more than 50% of the electric vehicle market today, typically somewhere between 50 to 80% in solar panels, in mobile handsets. Um so all those areas where we see China can build out market share dominance and also then integrate um other um value drivers and other forms of revenue generation within those, say, um applications built within a mobile handset and an operating system.

Does the election create an overhang for the China investment thesis right now, knowing how in the US both parties have been talking about where they would need to be tougher on China, or where they would just enact more tariffs on China?

To your point, I think a lot of that's baked in. So we can kind of consider today baseline when it when it comes to where the market is looking at and pricing China relative to the to the to the US political intervention. So if we get a Harris administration, it's going to be more of the same, and so that that probably is baked in today. But as I said, I think a Trump administration provides a binary interesting outcome where a deal could be done with the Chinese. The Democrats have brought no deals forward to do with them. Trump Trump administration could do that and bring it forward such that we could see improved economic relations between the countries, a reassuring of a lot of businesses to the US, a protection of US IP, but also enable um that there's a more productive and progressive trade between the countries, rather than this kind of ebbing tit-for-tat on tariffs um and export restrictions.

Ben, just lastly, while we have you, and and you know, as we're thinking about the US companies that have the largest exposure to the region as well, whether that be on a retail footprint side and and be in more business to consumer, or even on a business-to-business side as well, is there a way to look at some of the US stocks that are also set to benefit most by the stimulus that China is looking to enact even further?

Well certainly, the the objective of the stimulus is to kind of have a trickle-down effect to encourage consumption. So anyone in the consumption space, be it quick service restaurants, uh fast fashion, um travel, will see an immediate benefit. But I think the US uh companies will see less of a benefit than they would have maybe pre-COVID because there has been a bit of an export substitution, a gravitation towards local brands, um uh local names, be it cosmetics, uh restaurants, um soft drinks. Um and and that result of that is that generally the Chinese brands, at least on the ground, are going to benefit to a greater degree than their than their global peers, who are often priced at a higher point um uh and are being substituted.

Ben, thanks so much for taking the time here with us, Ben Harburg, who's the CVY Greater China Growth ETF Portfolio Manager. Appreciate it.