Ping An, China’s largest insurance company, is listing an ETF that looks like it was designed for the Tesla bubble.
The Ping An CSI New Energy Automobile Industry ETF (515700) will track an index of Chinese A-Shares that are helping make electric cars.
Companies will be included in the fund if the index provider judges them to be making enough revenue in a business that is directly related to electric cars. Companies included will be market weighted, with the biggest companies limited by an 8% cap.
According to the index factsheet, the biggest companies in the index are battery maker Contemporary Amperex Technology, and car manufacturer SAIC Motor and BYD. BYD is backed by Berkshire Hathaway.
Tesla – a non-prickable bubble?
Steve Eisman, the hero of Michael Lewis's book The Big Short, said in an that some companies are impervious to short selling because they are cults first and businesses second.
Looking at Tesla right now – its market capitalisation soaring as its debt position grows ever larger – one wonders if something of the sort is also true here.
For those unconvinced on Tesla, or for those with strong conviction in Chinese electric cars, this ETF could be of use. China has provided a lot of support for battery powered cars – on both the sell and buy side.
According to McKinsey, China provides something near 45% of the global electric vehicle market while Warren Buffett thought China was a good bet for the future of electric cars, hence he bought into BYD in 2008.
Chinese electric car makers have the additional benefit of not trading on super high valuations.