China Energy ETF Is Up Close to 40% YTD Amid Heatwave | ETF Trends

Energy prices have been rising higher globally for most of the year in tandem with inflation, but harsh weather conditions in China are adding another catalyst. It’s helping the Global X MSCI China Energy ETF (CHIE) move higher so far this year — almost 40%.

“Two months of scorching heatwaves and drought plunged China into an energy security crisis,” the Asia Times reported. “The southwest province of Sichuan, for example, relies on dams to generate around 80% of its electricity, with growth in hydropower crucial for China meeting its net-zero by 2060 emissions target.”

China, along with the rest of the world, is adopting a green energy initiative to reduce its carbon footprint. However, that’s taken a back seat for now in order to address the energy crisis.

“The energy crisis has seen Beijing shift its political discourse and proclaim energy security as a more urgent national mission than the green energy transition,” the Asia Times report added. “Now, the government is investing in a new wave of coal-fired power stations to try to meet demand.”

Targeted, Efficient Exposure

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 (the “parent 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:

  1. Targeted exposure: CHIE is a targeted play on the energy sector in China — the world’s second-largest economy by GDP.
  2. ETF efficiency: In a single trade, CHIE delivers access to dozens of energy companies within the MSCI China Index, providing investors an efficient vehicle to express a sector view on China.
  3. 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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