subject: Investing In China Capital Markets: The Easy Way !!! [print this page] Sector wise, though Auto & even Metal Industry has shown very high growth and demands, but China's Energy Sector has churned out some impressive facts & figures. With the highest number of head count in the world, China is also the world's largest consumer & producer of coal, responsible for over 41% of the global coal consumption, showing a surge of 180% in the last 10-12 years alone. China & her Energy companies are placed favorably in the Global Energy Marketplace.
For oil, it is the fifth largest producer & just short of USA, at second place in terms of consumption. China today is the largest energy consumer in the world. According to IEA, [International Energy Agency] in 2010 China's oil equivalent usage was 4% more than that of USA. Astonishing figures for the country, where 10 years ago net energy consumption was half of USA's energy usage.
A very logical inference would be that China's demand for fuel & energy is never going to stop growing [at least it seems for now]. The doubled up growth machinery & 3.6 billion people of the country are seriously disturbing the supply & demand dynamics of China's Energy Sector, which may result to exceptional gains for the indigenous companies associated with the industry & subsequently for the
investors having direct exposure to these companies or invested through China Energy Sector ETFs [example- CHIE ETF]. Chinese Energy companies once exporters of conventional energy resources, are today, aggressive importers in worldwide energy markets.
Investment procedures for foreign investors have rather witnessed some complexities in the last few years, however an effective & an easy way to infuse your money is to invest in China Energy Sector ETFs listed in US exchanges. It seems as a viable choice. The Energy Exchange Traded funds offer investments with small amounts for systematic investors and work well for trading and hedging. These funds have direct holdings in Chinese Energy sector companies, and returns are attributed to the performances of held equities or a benchmark index after expenses. Margins too are available on Energy ETFs. Fund units are index linked, can be traded during the exchange hours and rates fluctuate as per the buyer seller activity on the relevant exchange. For example Global X China Energy ETF [CHIE ETF] reflects the performance of the S-Box China Energy Index.
An investment worthy China Energy Sector ETF must be with majority holdings in the Oil & Gas Sector, as the country is largely operational on fossil fuels. State owned players such as CNOOC [CEO], China Petroleum & Chemical corporations [SNP] have produced good yields Year-on-Year basis.
Until now renewable energy sector has been a yield dragger for exchange traded energy funds. Though now it makes for a good choice with the current investor, due the discounted prices & a massive boom that is expected in the Alternative Energy Sector. Investing in China Energy sector can be an effective diversification of portfolio and may easily fetch a multibagger for the informed investor.
by: Adamina
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