A Higher Bar for China’s Companies Could Refresh ETFs
August 4th at 1:00am by Tom Lydon
Some companies in China are going high-tech, and it could deliver a charge to the country’s exchange traded funds (ETFs).
A little-known company there, BYD Corporation, has rocketed to the number two producer of batteries in the world in less than a decade of existence. Next up, BYD (which stands for Build Your Dream) is planning a green-energy car, reports David Barboza for the New York Times.
China is no longer happy with being the home of low-cost, low-skilled, low-margin manufacturing for toys, clothes and other goods, and is taking on the world’s largest corporations for business, customers, power and, of course, recognition.
The two-fisted approach involves incentives for companies to innovate while discouraging low-end manufacturing from operating in Southern China. This step would discourage one of the crucial drivers for their past economic rise, and beginning the next phase of becoming a high-tech economic zone.
ETFS that would thrive in this environment:
- SPDR S&P China (GXC), down 23.9% year-to-date
- iShares FTSE/Xinhua China 25 Index (FXI), down 20% year-to-date
- PowerShaes Golden Dragon Halter USX China (PGJ), down 26.8% year-to-date
- NETS Hang Seng China Enterprises Index Fund (SNO), launched May 14
