Getting energy exposure to start 2022 has been a win-win for savvy investors who spotted the opportunity early. That only got supercharged with Russia’s invasion of Ukraine, but for those who want concentrated exposure to the Chinese energy sector, the Global X MSCI China Energy ETF (CHIE) is worth a look.

Given China’s sheer size, the fund could be an opportune play for investors seeking to capitalize on the world’s second-largest economy. That said, it’s also the most populated and therefore requires a lot of energy consumption.

“China is the world’s most populous country (1.4 billion people in 2019) with a fast-growing economy that has led it to be the largest energy consumer and producer in the world,” the U.S. Energy Information Administration said. “Rapidly increasing energy demand has made China influential in world energy markets. Despite structural changes to China’s economy during the past few years, China’s energy demand is expected to increase, and government policies support cleaner fuel use and energy efficiency measures.”

Though China is undergoing something of a renaissance with respect to its energy consumption, it still can’t escape rising oil prices. A shift towards renewable energy to reduce its carbon footprint should further open up opportunities in the energy sector.

Targeted Exposure to China’s Energy Sector

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:

  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.

CHIE Chart

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