Core Viewpoint - China stocks demonstrated strong performance in 2022, with the MSCI China Index increasing by 31%, slightly below the 34% rise of the MSCI Emerging Markets Index, and there are expectations for continued growth in 2026, particularly for ETFs like the WisdomTree China ex-State-Owned Enterprises Fund (CXSE) which outperformed both indices last year [1][2]. Group 1: CXSE Fund Overview - The CXSE fund, valued at $504.3 million, is aligned with the WisdomTree China ex-State-Owned Enterprises Index and is expected to benefit from ongoing economic stimulation by Beijing, with a focus on growth companies [2]. - CXSE's growth profile is significant as it avoids state-controlled companies that typically operate in slow-growth sectors, instead focusing on sectors tied to China's growth and innovation narratives [3]. Group 2: Innovation and Sector Focus - There is optimism surrounding innovation and industrial upgrades in China, supported by strong policy backing and global competitiveness, which are expected to drive growth in these sectors as China aims for technological self-reliance [4]. - CXSE allocates over 64% of its investments to consumer discretionary, technology, and communication services sectors, linking it to China's dynamic consumer internet landscape and efforts to reduce tech import reliance [5]. Group 3: Market Perception and Future Opportunities - China's advanced capabilities and underappreciated innovation potential are gaining market recognition, with the government's 15th Five-Year agenda prioritizing tech innovation, which is anticipated to provide long-term support for equities [6]. - Consumer cyclical stocks, making up 29.06% of CXSE's allocation, are expected to be key growth drivers in 2026, particularly in services, experiences, and sports sectors, presenting vibrant opportunities for investors [7].