Taiwan ETF is China Power Play

Global ETF investors looking for an indirect way to tap China economic growth should consider the Taiwan (EWT) exchange-traded fund.

The first aspect of the Taiwan ETF basket that investors need to be aware of is the large exposure to the semiconductor industry - close to 50%. But keep in mind that the vast majority of semiconductor manufacturing takes place in China. In fact, close to 20% of China's total exports come from Taiwanese firms. 75% of Taiwan's foreign investment also heads to China. More than 1 million Taiwanese actually live and work in China and 75,000 Taiwanese companies have invested there as well.

How is this for a China play?

How will Taiwan's upcoming presidential election affect the Taiwan ETF? Go to Chartwell ETF and find out. Is it a matter of tails you win, heads you win?

The Taiwan market is currently trading about 19 times projected earnings but its 2008 GDP projected growth rate is 4%. (EWT) is down 5.1% so far this year and was up yesterday 1.9% in morning trading while the iShares FTSE/Xinhua China 25 Index (FXI) is down 14.5% for the year.

Comments

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Are the companies making up EWT not more exposed to a US slowdown than companies that are exposed mainly to the Mainland domestic market?