Despite China’s push towards more renewable energy sources, it won’t happen overnight. As such, China’s coal output recently hit a record high amid rising energy prices.
“China’s coal output rose 15% in March from the same month a year ago, with daily production climbing to a record, as Beijing urged miners to crank up operations to ensure steady market supply,” Reuters reports.
Energy security has been a top priority for China, especially since the start of the Russia-Ukraine conflict. Energy prices will only continue to push higher amid these geopolitical uncertainties.
That’s only been exacerbated by the recent spike in COVID-19 cases. Supply chain disruptions and renewed lockdown measures could also affect coal production moving forward for the world’s second-largest economy.
A China Energy Opportunity
As energy prices continue to be met with demand despite rising prices, this opens up opportunities for energy plays in China. One particular exchange traded fund (ETF) worth considering is the Global X MSCI China Energy ETF (CHIE).
CHIE seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI China Energy IMI Plus 10/50 Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index.
The underlying index tracks the performance of companies in the MSCI China Investable Market Index that are classified in the energy sector, as defined by the index provider. CHIE is a possible value play that investors can use as the fund dips below its 50-day moving average.
CHIE gives investors:
- Targeted exposure: CHIE is a targeted play on the energy sector in China — the world’s second-largest economy by GDP.
- ETF efficiency: In a single trade, CHIE delivers access to dozens of energy companies within the MSCI China Index, providing investors with an efficient vehicle to express a sector view on China.
- All share exposure: The index incorporates all eligible securities as per MSCI’s Global Investable Market Index Methodology, including China A, B, and H shares, red chips, P chips, and foreign listings, among others.
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