China Stock: Look At A New China ETF
About: (YAO, CEO, LFC, PTR, GXC, TAO, HAO, CEO, ICBC, CNOOC, GXC)
The Claymore/AlphaShares China All-Cap ETF (YAO) commenced trading on Monday, joining 10 other China-focused ETFs currently trading in the U.S., including two from Claymore. AlphaShares created an underlying index of companies from mainland China that are currently accessible to foreign investors. That excludes Chinese “A” and “B” shares, but includes shares listed in Hong Kong and New York. YAO also holds a small smattering of Singapore stocks.
Financials account for nearly 35% of YAO’s holdings with energy stocks accounting for 18% and technology making up 11.6%. Other large sector holdings include industrials and telecom at 9.55 and 7.6%, respectively. Top equity holdings include Bank of China, China Life Insurance (LFC), CNOOC (CEO), ICBC, and PetroChina (PTR). The ETF’s expense ratio 0.70%. One analyst compared YAO to the SPDR S&P China ETF (GXC), which has a lower expense ratio at 0.59%.
In first day of trading, more than 1.3 million YAO shares changed hands, showing that investor interest in anything China continues to remain robust. YAO only features companies with market caps of $500 million or higher. We like the sector mix YAO features and it has a great mix of large, mid and small caps with the various categories accounting for 57%, 33% and 10% of the ETF’s holdings.
Claymore features two other China ETFs currently trading, Claymore/AlphaShares China Small Cap (HAO) and Claymore/AlphaShares China Real Estate (TAO). The company has also filed to list China ETFs focusing on infrastructure, technology and consumer discretionary stocks. The emergence of more China-focused ETFs only bolsters our thesis that the China investment story is only beginning to ramp and we say the more China ETFs that come to market, the merrier.
