Important Information

Investors should not base investment decisions on this website alone. Please refer to the Prospectus for details including the product features and the risk factors. Investment involves risks. There is no guarantee of the repayment of the principal. Investors should note:

Global X China Clean Energy ETF’s (the “Fund’s”) investment in equity securities is subject to general market risks, whose value may fluctuate due to various factors, such as changes in investment sentiment, political and economic conditions and issuer-specific factors.
Many clean energy companies are involved in the development and commercialization of new technologies, which may be subject to delays resulting from budget constraints and technological difficulties. Obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants and general economic conditions also significantly affect the clean energy sector.
China is an emerging market. The Fund invests in Chinese companies which may involve increased risks and special considerations not typically associated with investments in more developed markets, such as liquidity risk, currency risks, political risk, legal and taxation risks, and the likelihood of a high degree of volatility.
The trading price of the Fund’s unit (the “Unit”) on the Stock Exchange of Hong Kong is driven by market factors such as demand and supply of the Unit. Therefore, the Units may trade at a substantial premium or discount to the Fund’s net asset value.
The Fund’s synthetic replication strategy will involve investing up to 50% of its net asset value in financial derivative instruments (“FDIs”), mainly funded total return swap transaction(s) through one or more counterparty(ies). Risks associated with FDIs include counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. FDIs are susceptible to price fluctuations and higher volatility, and may have large bid and offer spreads and no active secondary markets. The leverage element/component of an FDI can result in a loss significantly greater than the amount invested in the FDI by the Sub-Fund.
As part of the securities lending transactions, there is a risk of shortfall of collateral value due to inaccurate pricing of the securities lent or change of value of securities lent. This may cause significant losses to the Fund. The borrower may fail to return the securities in a timely manner or at all. The Fund may suffer from a loss or delay when recovering the securities lent out. This may restrict the Fund’s ability in meeting delivery or payment obligations from realisation requests.

China Clean Energy:
Capture Investment Opportunities Beyond Solar

By: Lizzy Liu

Concerns about oversupply in the solar manufacturing sector persist. Beyond solar stocks, however, the China Clean Energy ETF (2809 HK) offers diversified exposure to broader clean energy industries such as clean energy utilities, power equipment, wind and hydro, which we believe could offer more resilient returns. In the following sections, we will provide more comprehensive updates of each sector.

China power demand growth has sustainably outperformed GDP growth. In 1H24, China’s power demand rose 8.1% YoY, reaching 4,658bn kWh, while China added 152.8GW of power capacity. Despite oversupply concerns weighing on the performance of solar industry, other clean energy sectors in China have shown robust performance: 1) Hydro: strong hydropower generation in 2024 supported by adequate water flow; 2) Wind: a rally on recent progress in several offshore wind projects; 3) Power and grid equipment: positive policy support from increased investment in power grids as well as growing opportunities in overseas markets.

1. Hydro: Strong Power Generation Supported by Ample Water Flow

According to the China National Climate Center, the national average precipitation between July 16 and August 15 this year reached 132.5 millimeters, 12.8% higher than that of a normal year. This figure ranks as the fifth highest in historical records since 1961 for this specific timeframe.

In 3Q24 (QTD), the inflow and outflow at the Three Gorges increased by 51% and 83% YoY, respectively. According to the China National Meteorological Centre (NMC), from August 20 to August 29, regions in South China, western and southern Yunnan, and southern Tibet are anticipated to experience cumulative rainfall ranging from 50 to 120mm, with certain areas possibly receiving over 150 mm. Overall, precipitation in these regions is expected to be 30% to 70% above normal levels.

2. Wind: Accelerated Offshore Wind Approval Enhancing Market Confidence

In July, Shanghai announced the approval of 29.3GW of offshore wind projects, while 7GW of Guangdong’s offshore projects in provincial waters, introduced in 2023, received approval by July 24. Additionally, a significant number of projects initiated competitive bidding in 2024, particularly in new offshore wind markets. Guangxi has begun bidding for a substantial 6.5GW long-distance offshore wind project (over 100km, compared to the national average of 40km in 2023). Furthermore, several coastal provinces, including Zhejiang, Shanghai, Liaoning, and Hebei, have unveiled new offshore wind targets or plans, while Hainan has raised its previous targets, thus bolstering long-term domestic demand for offshore wind energy.

China’s State Grid has set its new annual investment budget for 2024 at over Rmb600bn (approximately US$83bn), representing an increase of Rmb71.1bn or more than 13% YoY. This growth exceeds the previously established target of over 5% growth set at the beginning of the year. The additional funding will be allocated to three key areas: 1) the construction of ultra-high voltage (UHV) DC and AC transmission projects; 2) the enhancement of national grid infrastructure and interconnection with regional grids; and 3) the upgrading of power grid digitalization.

In August, the government introduced an Action Plan to Accelerate the Construction of New Power System for 2024-2027. This plan outlines nine key actions designed to expedite the development of a new power system through grid upgrades, increased local renewable energy consumption, and improved power grid flexibility.

Companies involved in power grid equipment, such as XJ Electric, NARI, and Pinggao, are expected to benefit from these initiatives.

3. Power and Grid Equipment

Companies involved in power grid equipment, such as XJ Electric, NARI, and Pinggao, are expected to benefit from these initiatives.

Growing opportunities for Chinese grid equipment in overseas markets: Demand for transformers continues to be strong, as demonstrated by significant YoY and MoM increases. In July, transformer exports rose by 27% YoY and 4% MoM, thanks largely to increased demand from North America and Europe. Similarly, meter exports in July experienced a 30% YoY increase, primarily driven by a surge in demand from Africa, while Europe reported a 17% YoY growth.

Related Global X ETFs’ Product

	Global X China Clean Energy ETF (2809 HK)
Listing Date	17 Jan 2020
Reference Index	Solactive China Clean Energy Index NTR¹
Primary Exchange	Hong Kong Stock Exchange
Ongoing Charges Over A Year²	0.68% p.a.
Product Page	Link

Footnotes

¹The Index is a net total return, free float market capitalisation weighted index. A net total return index seeks to replicate the overall return from holding a portfolio consisting of the Index constituents and in the calculation of the Index considers payments such as dividends after the deduction of any withholding tax or other amounts to which an investor holding the Index constituents would typically be exposed.
²The Fund adopts a single management fee structure, whereby a single flat fee will be paid out of the assets of the Fund to cover all of the costs, fees and expenses of the Fund. The ongoing charges figure is an annualised figure based on the ongoing expenses of the Fund, expressed as a percentage of the Fund’s average Net Asset Value over the same period. The figure may vary from year to year. The Fund adopts a single management fee structure, whereby a single flat fee will be paid out of the assets of the Fund to cover all of the costs, fees and expenses of the Fund. The single management fee does not include the fees related to FDIs (including swaps) entered into by the Fund. The ongoing charges of the Fund are fixed at 0.68% of the Fund’s Net Asset Value, which is equal to the current rate of the management fee of the Fund. For the avoidance of doubt, any ongoing expenses of the Fund exceeding the ongoing charges of the Fund (i.e. the management fee) shall be borne by the Manager and shall not be charged to the Fund. Please refer to the Key Facts Statement and the Prospectus for further details.

Disclaimer

This document contains the opinions of Mirae Asset Global Investments (Hong Kong) Limited (“MAGIHK”) and is intended for your use only.

It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument and shall not constitute any form of regulated financial advice, legal, tax or other regulated service. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. MAGIHK makes no representation as to their accuracy or completeness and therefore do not accept any liability for a loss arising from the use of this document.

Investment involves risk. Forecasts, past information and estimates have certain inherent limitations. Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these opinions are suitable for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

Past performance information presented is not indicative of future performance. Before making any investment decision, investors should read the fund’s offering document for further details including the risk factors. Investors should ensure they fully understand the risks associated with the applicable investment and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice if in doubt.

Issuer: Mirae Asset Global Investments (Hong Kong) Limited (Licensed by the Securities and Futures Commission for Types 1, 4 and 9 regulated activities under the Securities and Futures Ordinance). This document has not been reviewed by the Securities and Futures Commission or the applicable regulator in the jurisdiction which this article is posted and no part of this publication may be reproduced in any form, or referred to in any other publication, without express written permission of MAGIHK.

Authors: Liu Zijun (Licensed by the Securities and Futures Commission for Types 4 regulated activities under the Securities and Futures Ordinance). Liu Zujun and her associate(s) do not hold the securities/fund mentioned in the material.