Week in Review: Alternative Energy ETFs Surge and More
Chinese equities underperformed while clean energy and gold miners ETFs soared in contrast.
Last weeks’ top performing ETFs included alternative and clean energy ETFs driven by increasing oil and gas prices resulting from the Russian Ukrainian War. On the contrary, ETFs with exposure to Chinese equities plummeted amid regulatory pressure.
Alternative Energy ETFs Continue Surge as War Spikes Prices
Clean energy funds have benefitted from heightened concerns around energy security. The ongoing war in Ukraine and biting sanctions against Russia and its energy companies have sent European gas prices to fresh records. Consequently, this has triggered what is believed to be one of the biggest oil-supply shocks since World War II. With traditional fossil fuels close to or at record prices, alternative and clean energy are now looking more attractive to both industry and consumers.
The Horizons Global Uranium Index ETF (HURA) jumped by 19.57% this week and the Horizons Global Hydrogen Index ETF (HYDR) by 14.07%. The BMO Clean Energy Index ETF (ZCLN) rose by 7%, the CIBC Clean Energy Index ETF (CCLN) by 6.75%, and the Harvest Clean Energy ETF (HCLN) by 6.60%.
Unlike the previous week, carbon credit ETFs performed well this time. The only available two carbon credit ETFs Canada landed spots on the best performing ETFs of the week. The Horizons Carbon Credits ETF (CARB) rose by 15.96% while the Ninepoint Carbon Credit ETF (CBON.U) rose by 5.83%.
Alternative Energy ETFs in Play:
Investors Benefitting from the Certainty of Safe Havens During the Uncertainty of War
The conflict has also sent investors profiting from safe havens like Gold. ETFs exposed to gold mining also rose as their profitability is expected to increase along with the rise in the yellow metal prices. Over this week, four gold miners ETFs were among the best performing ETFs in Canada. The BMO Junior Gold Index ETF (ZJG) was up 4.44%, the Harvest Global Gold Giants Index ETF (HGGG) 3.55%, the BMO Equal Weight Global Gold Index ETF (ZGD) 3.36%, and the Ninepoint Gold & Precious Minerals Fund (GLDE) 3.16%.
Gold Minor ETFs in Play:
Regulatory Fears, Foreign-Listing Woes Hit Chinese Stocks
While all eyes are on the Russia-Ukraine border, the ongoing rout in Chinese stocks has passed under the radar for many investors. Chinese companies have been battered by increasing regulatory risk at home and abroad, rising commodity prices and new Coronavirus outbreaks.
From a regulatory perspective, Chinese companies are facing the twin complexities of forced delisting from Wall Street and difficulties meeting the more stringent listing requirements in Hong Kong and Singapore. The SEC recently announced that 5 Chinese companies (Yum China Holdings, ACM Research, BeiGene, Zai Lab, and Hutchmed) would be delisted if they could not produce audit documents to support their financial results.
Policy makers and regulators are calling for closer scrutiny of Chinese companies listing in the US while Beijing has engaged in a crackdown on offshore-listed technology companies who are viewed as potential risks to national security.
The CI ICBCCS S&P China 500 Index ETF (CHNA.B) fell 7.02% over the week and is down more than 14.93% YTD. The BMO MSCI China ESG Leaders Equity Index ETF (ZCH) and the iShares China Index ETF (XCH) were the two least performing ETFs in Canada as they managed to lose 10.56% and 12.37% this week, respectively.
China ETFs in play:
Data for this article is as of March 11th, 2022.
