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 Electric Vehicle and Battery 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.
Electric vehicle companies invest heavily in research and development which may not necessarily lead to commercially successful products. In addition, the prospects of Electric vehicle companies may significantly be impacted by technological changes, changing governmental regulations and intense competition from competitors.
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.
Monthly Commentary on Global X China EV & Battery ETF (2845)
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Battery material costs have stabilized: Lithium prices declined sharply year-to-date, consistent with our view that the overall lithium supply tightness will ease into 2023. Prices began stabilizing in May after battery and battery material destocking was almost complete. The prices have also hit levels around RMB 150,000/ton, which is considered a balanced price point – leaving enough profit to lithium resources players while allowing battery cell makers to lower the product cost meaningfully. Of late, battery makers have become more willing to produce and start restocking to meet the potential demand in the second half. For other battery materials, there were modest levels of annual price cuts. The sharp correction in lithium price may be negative for short-term sector sentiment but positive for long-term EV and battery competitiveness.
China EV sales and competition landscape are still challenging: Post the Shanghai Auto show, we saw various new and competitive EV and plug-in hybrid EV (PHEV) car models to be launched this year. According to news media, more than 60% of new car models launched in China year-to-date are NEVs.
Risk of further price competition remains: In late 2022 and early 2023, Tesla announced an EV price cut, which initiated a price war in China amid seasonally weak industry-level sales volume. Huawei, Xpeng, Nio, Aion, and BYD have also announced price cuts. Tesla sales in China have rebounded after the price cut, but the magnitude was not as high as expected as their car models are relatively outdated. In May, Tesla raised some model prices modestly, reversing the price cut trend year-to-date and sending stabilizing signals to car buyers. With still a short order lead time and high inventory, we can’t rule out the possibility of Tesla’s further price adjustment in the rest of 2023.
US Inflation Reduction Act (IRA) yet to have clarity: The IRA detail announced this March was similar to the December version. There were limited new implications for Chinese battery suppliers. The Ford-CATL collaboration is yet to be finalized. Any progress will provide clarity to Chinese players on whether to enter the US battery market.
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