By Carl Delfeld of the Chartwell ETF Advisor and Chartwell Partners Asset Management
Global ETF investors looking for an indirect way to tap China economic growth should consider the Taiwan (EWT) exchange-traded fund.
The first aspect of the Taiwan ETF basket that investors need to be aware of is the large exposure to the semiconductor industry - close to 50%. But keep in mind that the vast majority of semiconductor manufacturing takes place in China. In fact, close to 20% of China's total exports come from Taiwanese firms. 75% of Taiwan's foreign investment also heads to China. More than 1 million Taiwanese actually live and work in China and 75,000 Taiwanese companies have invested there as well.
How is this for a China play?
How will Taiwan's upcoming presidential election affect the Taiwan ETF? Go to Chartwell ETF and find out. Is it a matter of tails you win, heads you win?
The Taiwan market is currently trading about 19 times projected earnings but its 2008 GDP projected growth rate is 4%. (EWT) is down 5.1% so far this year and was up yesterday 1.9% in morning trading while the iShares FTSE/Xinhua China 25 Index (FXI) is down 14.5% for the year.
The slumping semiconducter industry may turn up soon, but when? Should Taiwan be part of your China strategy? Go to Chartwell ETF for some answers.
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