The Chinese stock market struggled again in 2013 as the
country slows from its robust growth of the last decade.
The big name companies in China underperformed, but the entire
market of stocks did not underperform last year.
Most investors will look to gain access to China through an
emerging market ETF or one of the well-known China ETFs. Just
like the U.S., China's stock market is broken down into sectors,
with winners and losers each year. Last year the technology
sector in China was a big winner that flew under the radar.
China Technology ETFs
The beauty of ETFs is that they offer investors exposure to
niche sectors such as Chinese technology stocks. As a matter of
fact, there is not only one, but three ETFs that invest in the
The largest of three is the Guggenheim China Technology ETF
). The ETF is a basket of 40 Chinese stocks that were able to
gain 57 percent in 2013. The top holdings include Tencent
Holdings, Baidu (NASDAQ:
) and Qihoo 360 Technology (NASDAQ:
). The annual expense ratio is 0.70 and the ETF trades on average
39,000 shares per day.
Beware of Certain Chinese ETFs (FXI, PGJ,
The Global X China Technology ETF (NYSE:
) is composed of 27 stocks and was up 53 percent last year. The
top holdings are Sina (NASDAQ:
), Tencent Holdings, and QIHU. The annual expense ratio is 0.65
percent and the ETF trades an average of 12,500 shares per day.
The ETF has a total of $13.2 million in assets.
The newest addition to the lineup is the KraneShares CSI China
Internet ETF (NYSE:
). The ETF began trading in August 2013 and is up 32 percent
since its inception. The top holdings are Tencent Holdings, BIDU,
and QIHU. The expense ratio is 0.68 percent and it trades 24,000
shares per day on average. There is a total of $25.8 million in
Why Chinese Technology ETFs
Consider that there are more Internet users in China than
there are people in the U.S. and it is easy to understand why the
sector has performed well. And the country is not done growing as
the penetration of Internet users in the country remains low
versus other large economies around the globe. As more Chinese
get on the Internet it will result in a higher demand for mobile
gaming, social media, e-commerce, and so on.
The best way to understand what the three ETFs offer is to
compare them to the U.S. stock market. Instead of owning stocks
such as Google, Facebook and Amazon.com, the three
Chinese ETFs own the country's version of the U.S.-based
companies. The one difference is that the growth potential for
the Chinese technology stocks is great than their peers in the
(c) 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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