New ETF Launch: Chinese Tech Stocks (CQQQ, BIDU, NTES)

Claymore Securities, Inc. is launching the Claymore China Technology ETF (NYSE: CQQQ).  This is said to be the first exchange traded fund with a specific focus on the Chinese technology sector, and marks Claymore’s fourth China-focused ETF.  This holds many companies you will recognize, and some which you may trade or invest in individually.
This tracking goal is to replicate the AlphaShares China Technology Index of the investible universe of publicly-traded companies based in mainland China, Hong Kong or Macau in the information technology sector open to foreign investment. The companies included in the Index must have a float-adjusted market capitalization initially of $200 million or greater and $150 million or greater for ongoing inclusion.

As of October 31, 2009, this index included 34 securities… But the top 5 of the 34 stocks have an approximate weighting of over 39% of the entire ETF.  The top 2 holdings you can trade as ADRs and ADSs in the US are Baidu, Inc. (NASDAQ: BIDU) and Netease,com Inc. (NASDAQ: NTES).  The five top holdings and weightings are as follows:

TENCENT HOLDINGS LTD. 10.17 %
BAIDU.COM – ADR                 9.44 %
NETEASE.COM INC-ADR     7.29 %
BYD CO. LTD.                            7.09 %
ALIBABA.COM LTD.              5.76 %

Claymore cited some specific projections for China: China is predicted to claim the world’s highest GDP growth in both 2009 and 2010 and is expected to see a substantial increase in China’s technology demands. Also noted is that approximately $54 billion of China’s $585 billion stimulus package is being allocated to technology advancements.

Jon C. Ogg
December 8, 2009