Tensions Between Google And China Bode Well For These China Technology ETFs

“With tensions coming to a boil in the dispute between Google (GOOG) and China, ETF investors may find a China Technology ETF to be a good way to play the domestic firms that will benefit in the absence of the search giant. This week, the battle between Google and China escalated to a new level. Although it was previously rhetorical, the search giant took action on Monday in an attempt to override the Chinese government’s ability to censor its search results,” Don Dion Reports From The Street.    

Dion goes on to say, “Web surfers looking to search Google’s China homepage, Google.cn, were forwarded to the uncensored Hong Kong landing page, Google.com.hk . By Tuesday, however, the government managed to continue to block China’s 390 million Internet users from searching controversial topics such as Tiananmen Square. In light of Google’s action, a number of the company’s partners, including telecom giants, are mulling the possibility of pulling out of their respective deals with the search giant. Even Hong Kong billionaire, Li Ka-shing, has gotten involved in the dispute, dropping Google as the main search engine for his Tom Online Website.”   

“Given the excitement surrounding these Internet companies, now may be an ideal time for investors to pay attention to the dominant China tech ETF on the market. Currently, there are two Chinese technology ETFs: the Claymore/AlphaShares China Technology ETF (CQQQ) and the GlobalX China Technology ETF (CHIB). Although both provide ample exposure to a broad array of tech firms including Baidu and Sohu, their performance throughout 2010 has diverged considerably. Investors holding GlobalX’s CHIB fund have seen considerable underperformance. Year to date through March 23, CHIB has gained 2% while CQQQ has gained 6%,” Dion Reports.    

Google and China may eventually resolve their issues which could change things rather quickly. Otherwise, these China technology ETFs provide a great way to play the trend although investors should be aware that these ETFs are thinly traded.  We have put together some details on the two ETFs including the stocks that make up these ETFs below:    

The investment (CQQQ) seeks to replicate, net of expenses, the AlphaShares China Technology Index. The fund will invest at least 80% of assets in common stock, ADRs, ADSs, GDRs and IDRs that comprise the index. The index is designed to measure the performance of publicly-traded companies which are based in mainland China, Hong Kong or Macau, are in the information technology sector (as defined by GICS) and are open to foreign investment. The fund is nondiversified.

FUND HOLDINGS
as of 3/24/10
 
NAME SYMBOL WEIGHTING
TENCENT HOLDINGS LTD (700)  10.34 %
BAIDU.COM – ADR (BIDU)  9.74 %
BYD CO LTD (1211)  7.41 %
NETEASE.COM INC-ADR (NTES)  6.90 %
SEMICONDUCTOR MFG USD0.0004 (981)  4.68 %
ALIBABA.COM LTD (1688)  4.65 %
ZTE CORP (763)  4.48 %
LENOVA GROUP LTD (992)  4.42 %
KINGBOARD CHEMICAL HOLDINGS (148)  4.24 %
SINA CORP (SINA)  4.01 %
HI SUN TECHNOLOGY CHINA L (818)  3.73 %
SOHU.COM INC (SOHU)  3.36 %
SHANDA INTERACTIVE ENTERTAINMENT LTD (SNDA)  3.27 %
AAC ACOUSTIC TECHNOLOGIES (2018)  3.00 %
DIGITAL CHINA HOLDINGS LTD (861)  2.34 %
TPV TECHNOLOGY LTD (903)  2.32 %
ASIAINFO HLDGS (ASIA)  2.29 %
JU TENG INTERNATIONAL HOL (3336)  1.98 %
GIANT INTERACTIVE GROUP INC (GA)  1.94 %
BYD ELECTRONIC INTERNATIO (285)  1.75 %
KINGBOARD LAMINATES HOLDI (1888)  1.70 %
TRAVELSKY TECHNOLOGY LTD (696)  1.54 %
COMBA TELECOM SYSTEMS HOL (2342)  1.47 %
KINGDEE INTERNATIONAL SOF (268)  1.34 %
KINGSOFT CORP LTD (3888)  1.13 %
MEADVILLE HOLDINGS LTD (3313)  0.86 %
WASION METERS GROUP LTD (3393)  0.83 %
NAN HAI CORP LTD (680)  0.79 %
CHINA DIGITAL TV HOLDING (STV)  0.77 %
INSPUR INTERNATIONAL LTD (596)  0.75 %
CHINA AEROSPACE INTERNATI (31)  0.75 %
GLOBAL RESOURCES DEVELOPM (8116)  0.63 %
SOLOMON SYSTECH INTERNATI (2878)  0.61 %

Chart for Claymore/AlphaShares China Technology (CQQQ)     

The investment (CHIB) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S-BOX China Technology index. The fund normally invests at least 80% of total assets in the securities of the index and in depositary receipts based on the securities in the index. It may also invest up to 20% of assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in stocks not included in the index. The fund is nondiversified.    

Data as of 3/24/2010

Price ($) Shares
Held Market Value ($)    

  % of Net Assets Name Identifier
  6.86 BAIDU.COM, INC. ADR 056752108 608.50 435.00 264,697.50
  6.11 CTRIP.COM INT’L ADR 22943F100 39.26 6,000.00 235,560.00
  5.27 SEMICONDUCTOR MANUF. 6743473 0.11 1,925,000.00 203,391.36
  5.00 LENOVO GROUP LTD 6218089 0.67 289,500.00 192,853.28
  5.00 TENCENT HOLDINGS LTD B01CT30 20.40 9,450.00 192,752.77
  4.91 FOXCONN INTL HOLDINGS B05MBB8 1.04 182,000.00 189,248.67
  4.57 CHINA TELECOM CORP LTD 6559335 0.49 363,000.00 176,333.93
  4.45 SINA CORP US 2579230 38.53 4,460.00 171,843.80
  4.42 GIANT INTERACTIVE GP ADR 374511103 7.57 22,500.00 170,325.00
  4.35 LONGTOP FIN TECHNO-ADR 54318P108 30.61 5,485.00 167,895.85
  4.26 CHINA MOBILE 6073556 9.68 17,000.00 164,504.12
  4.22 ZTE CORPORATION B04KP88 5.90 27,600.00 162,878.02
  4.12 SOHU.COM INC 83408W103 53.18 2,990.00 159,008.20
  4.12 NETEASE.COM INC ADR 64110W102 37.36 4,250.00 158,780.00
  4.04 SHANDA INTERACTIVE – ADR 81941Q203 41.59 3,750.00 155,962.50
  3.85 CHINA UNICOM 6263830 1.19 125,000.00 148,500.82
  3.69 ALIBABA.COM LTD B28Q940 2.03 70,000.00 142,148.46
  3.65 PERFECT WORLD CO LTD-ADR 71372U104 39.66 3,550.00 140,793.00
  3.50 AAC ACOUSTIC TECH HOLD B0F8Z58 1.71 79,000.00 134,976.61
  2.91 CHINA COMMUNICATION SERV- B1HVJ16 0.50 223,000.00 112,349.08
  2.70 ASIAINFO HOLDINGS INC 04518A104 26.07 4,000.00 104,280.00
  2.41 VANCEINFO TECHNOLOGYS ADR 921564100 20.70 4,500.00 93,150.00
  2.05 BYD ELECTRONIC INTL CO B29SHS5 0.84 94,000.00 79,212.46
  1.60 KINGDEE INTL SOFTWARE 6327587 0.36 173,000.00 61,746.70
  1.21 KINGSOFT CORP LTD B27WRM3 0.80 58,000.00 46,484.30
  0.76 KONGZHONG CORP – ADR 50047P104 8.40 3,480.00 29,232.00
  0.00 CASH CASH 1.00 -70.16 -70.16

Chart for Global X China Technology ETF (CHIB)

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