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Chinavestor ETF Spotlight: Global X China Energy ETF

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oil_3 December 3, 2010 (Chinavestor) Oil is back. Not that it went anywhere, but this week's price action in crude futures has been impressive to say the least with NYMEX-traded crude for January delivery closing at a 25-month high on Thursday. There could be more to come as a plethora of banks are forecasting $100 (or higher) oil in 2011 and even higher prices in 2012.

Factor in robust mergers and acquisitions activity in the energy sector (the industry has been among the busiest in terms of deal volume this year) and now may just be the ideal time to have a look at the Global X China Energy ETF (NYSE:CHIE). After taking a mighty tumble from around $17 to $15 in latter half of November, the Global X China Energy ETF (NYSE:CHIE) has rebounded nicely this week to tack on almost 3%, helped in part by some bullish trade in the oil patch.

To be sure, the Global X China Energy ETF (NYSE:CHIE) is an oil-heavy ETF with Cnooc Ltd. (NYSE:CEO), PetroChina Co. Ltd. (NYSE:PTR) and Sinopec (NYSE:SNP), China's top three oil producers, accounting for almost a third of the fund's weight. That makes the ETF an interesting way to play the aforementioned M&A activity in the oil sector because all three Chinese oil giants have been active acquirers of global energy assets.

That said, the the Global X China Energy ETF (NYSE:CHIE) is not all about oil. The ETF offers investors diversity throughout the energy patch by including some oil services names and Yanzhou Coal (NYSE:YZC), China's fourth-largest coal producer. Highlighting the notion that the Global X China Energy ETF (NYSE:CHIE) is a broad energy play is the fact that the fund is not solely focused on fossil fuels producers.

As so many investors and traders know, Chinese solar stocks are loaded with potential and volatility, making that sector a compelling trading opportunity at the very least. The Global X China Energy ETF (NYSE:CHIE) accommodates investors looking for exposure to Chinese solar names by including stocks such as JA Solar (Nasdaq:JASO), LDK Solar (NYSE:LDK), Suntech Power (NYSE:STP) and Trina Solar (NYSE:TSL) among its lineup. Overall solar exposure for the ETF checks in at a decent 13% of the fund's weight, approximately. Talking about solars; a big disappointment for most investors in November. Read our special coverage: Why China solars can't get love?

Knocks on the Global X China Energy ETF (NYSE:CHIE) would included its light volume (less than 4,300 shares per day), high expense ratio (0.65%) and low assets under management ($4.6 million in a year of trading). On the bright side, it is possible that the volume and AUM change for the better as more investors embrace the Chinese energy sector as a way of playing higher oil prices.



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