New Listing

Global X lists China clean energy ETF

David Tuckwell

a field of sunflowers

Korean investment giant Mirae has widened out its Hong Kong ETF suite, under its Global X sub-brand with the launch of a China clean energy ETF.

The Global X China Clean Energy ETF (2809) will invest in Chinese companies helping to combat global warming, by producing renewable energy.

Like most Global X indexes, this new fund tracks a Solactive index. The index uses public documents to identify Chinese companies in solar, tidal, wind and other energy sources.

The fund charges 0.68%.

Analysis – sounds like a great idea

If I were to pick one country’s alternative energy sector I would pick China’s. China has been the world’s most proactive clean energy investor.

This is partly due to the fact that Chinese oil majors (CNOOC, Sinpoec, PetroChina) are state-owned and the Chinese economy is well diversified.

This state ownership means they are not allowed to pour their vast treasuries into nudging state policy towards global warming denial.

While diversification means that China has less to lose if the global oil industry disappears – unlike Saudi Arabia, Kuwait, Qatar.

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While potentially rewarding, the fund has risks. Looking through the index backtest provided by Solactive, the fund is fiercely volatile, with -10% drawdowns occurring almost every month. The fund only holds 18 companies at the time of writing. I must confess I have never heard of any of them.

Still, it is a nice idea.

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