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DonnaWalter
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  • China Energy Equity Is Cheap And Available! 0 comments
    May 4, 2013 4:38 AM

    In the current year to date most energy funds including a pure play like Global X China Energy ETF, have appreciated less than 3%, considering that this is one fourth of last year's growth clearly suggests that there is a lot to be gained even on a 6 - 9 months outlook.

    China is a fast growing economy and has greatly influenced global issues and affairs in more than one way. It is part of the BRIC union and these nations contribute to about 50 % of the world economic growth, close to 18% of trading activity globally is carried on by the BRICS and their GDP contribution to the world economy is around 25%.

    In terms of the world population approximately 43% of it comes from the above union. Talking about China, it has surpassed its tag of emerging nation in one simple sense that it is already in motion to outshine the United States by the year 2030 on many counts.

    China's GDP levels have been stable middling between 8 - 10 %. Chinese Stock market on the other hand has been experiencing some what a slowdown for past couple of years but on the plus side the market is available on discounted rates when compared to past records.

    The year 2013 could present a substantially stabilizing picture for the stock markets and the economy. In the current time period, Investors with an entry in China Energy funds, that is characterised by a long term commitment could benefit positively.

    China has a fairly advance and well developed manufacturing sector (this definitely requires a vast amount of energy). This is coupled with some more positive like productive work force, rising domestic consumption and growing numbers of the middle class strata.

    Some mention worthy negatives may include nation's dependency on exports, then there are many Chinese companies that do not follow transparency policies set by international standards and this way investors are not fully aware of their purchases, also liquidity issues arise as the china specific funds deal with not the big but only medium and small firms and lastly the nation's one child policy has created a shift in the demographics and the young sector of population is on the decline.

    The nation is encouraging private investments in its energy sector. This is to keep pace with the proposed market reforms of the sector. The energy sector will be experiencing improvements in its management and laws related with this sector. The projects right from coal processing, oil refining to exploration and establishment of energy resources including newer & renewable forms, the laying and construction of oil and gas pipelines and overall power industry are open to private money.

    The CERS (China Energy Research Society) has pressed the need to promote more clean energy forms such as wind, solar and hydro power in place of fossil fuels. This will aid in the green efforts of the country for the period of year 2011 - 2015. Currently the non-fossil fuels are providing for slightly more than 8.5% of the country's energy needs and the aim is to boost this figure to close to 11.5 % or even further.

    "Non diversified China Energy ETFs have somewhat experienced a dull 2013, but what the street and the markets cannot ignore is the huge power demands of this nation which has shown constant growth throughout the past decade. Foreign investors seeking to play the Sino power demands must look to invest china energy sector through the equity traded funds, as most assets for these China focussed funds are listed on foreign exchanges thus direct equity exposure is difficult and volatile."

    Global x china energy etf [CHIE] delivers as per the performance of the Solactive China Energy Index. This China energy ETF accumulates a close to 70% of the holdings among the top ten stocks and counts the state run CNOOC, Sinopec, China Shenhua Energy Co. Ltd and PetroChina as its top four assets. CHIE operates at an annual expense of 0.65% and has delivered YTD returns of 15.65% as of 31/12/2012 when bought at NAV.

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