China Market Liberalization A Boon To ETF Investors

August 28, 2014

A suite of China sector ETFs stands to benefit from further market liberalization.


Chart courtesy of

The Financial Times is reporting that China has issued a crude oil import license to a private company as it takes it first big step toward opening the energy sector that has previously been controlled by state-owned firms.

That's big news for ETF investors, as some issuers have put the cart before the horse and already launched sector-specific ETFs. The offerings include the Global X China Energy ETF (CHIE | D-35), which tracks a cap-weighted index of investable Chinese energy companies.

So far, that's been slim-pickings for CHIE, as the free-float on state-owned energy companies is only a small fraction of the market capitalization of the companies themselves. Fortunately, more market liberalization could boost the prospects for ETFs like CHIE, which has yet to attract any serious interest from investors and, as a result, is dangerously illiquid.

CHIE isn't alone though; there's a suite of sector-specific China focused ETFs that can be found on this ETF Screener by selecting "China" in the geography filter and "sector" in the category filter.

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