This ETF is at Risk if U.S.-China Trade Talks Break Down

In the early spring it appeared as if the United States and China were coming close to a trade deal. The Trump administration had hyped up negotiations, which helped along a stock market boom that has extended from the beginning of 2019. However, trade talks are now at risk of breaking down.

The U.S. and China will hold the second round of last-minute trade discussions this evening. The Trump administration moved forward to raise tariffs on $200 billion worth of Chinese goods from 10% to 25%. It indicated that it may impose an additional 25% tariff on another $325 billion worth of goods.

The U.S. side claims that China was ready to make a deal before backtracking late in negotiations. U.S. negotiators are seeking significant concessions including binding legal language that China change its laws covering intellectual property theft, forced technology transfers, competition policy, currency manipulation and access to financial services.

The Global X MSCI China Information Technology ETF (NYSE:CHIK) is a risky hold as we enter the final trading day of the week. The ETF seeks to invest in large- and mid-sized capitalization segments of the MSCI China Index that are classified in the Information Technology Sector.

Heightened trade tensions will lead to more volatility for China-focused ETFs. With China’s technology sector in the U.S. crosshairs, this one is particularly risky.