Shares of the Guggenheim Solar ETF (NYSEArca: TAN) are off nearly 3% in midday trading Wednesday on news Chinese makers of photovoltaic products are mulling retaliation against anti-dumping measures recently enacted by the U.S. Commerce Department.
The Commerce Department recently enacted anti-dumping and anti-subsidy investigations on Chinese and Taiwanese imports of silicon solar photovoltaic products. This is not the first time U.S. regulators have targeted Chinese solar firms, which have been accused of flooding the market with inexpensive supply at times of tepid demand for solar power.
“In November 2011, the US levied an anti-dumping tax of between 18.32% and 249.96% on PV products imported from China, and an anti-subsidy tax of between 14.78％ and 15.97％,” according to Want China Times.
TAN’s rival, the Market Vectors Solar Energy ETF (NYSEArca: KWT), is also off almost 3% Wednesday. Both ETFs feature heavy China exposure. The world’s second-largest economy is the largest country in TAN, occupying almost 37% of that ETF’s weight. Hong Kong accounts for another 10.2% of TAN’s weight. China and Taiwan combine for 45.5% of KWT’s weight. [Clouds for Solar ETFs?]
Several of TAN’s top-10 holdings are Chinese companies, including Yingli Green Energy (NYSE: YGE), which said the Commerce Department probe “will expand its scope from that in 2011. In November 2011, the US levied an anti-dumping tax of between 18.32% and 249.96% on PV products imported from China, and an anti-subsidy tax of between 14.78％ and 15.97％,” according to Want China Times. The U.S. is the second-largest export market for Yingli.
Several years of lost subsidies, slack demand and plunging prices hampered TAN and KWT, highlighting the ETFs’ vulnerabilities to weakness in China’s solar market. The two ETFs fell on such hard times that both had to be reverse split in 2012.