CONSIDER A BET ON CHINA SUN

China Exposure Could Lift Solar ETFs
Don Dion, August 17, 2010 (The Street)

"…[A]lternative energy funds have been undeniably unstable over the course of the year…[but] the Claymore/MAC Global Solar Index(TAN) and Market Vectors Solar Energy(KWT) [elucidate the sector]...[T]he solar industry…[is] faring poorly in the market's turbulence. After peaking in early to mid-January…TAN and KWT have both seen a dramatic decline throughout 2010, incurring respective losses of 26.7% and 25.5%.

"However…China's energy-dependence has reached global proportions…[It is now] the world's largest energy consumer, and…[is building] cleaner, more efficient energy sources…In 2009, China consumed 2.252 billion tons of energy (and relevant energy equivalents), surpassing the consumption of the U.S. by a solid 4%…[D]emand was driven by exponential growth in the…industrial and infrastructure sectors…"

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"[China’s] craving for energy is likely to expand…[and] has agreed to plans of emission reduction, especially through the establishment of greener energy alternatives…China plans to devote $738 billion over the next decade to cleaner energy sources…Nearly one-third of nuclear power plants currently under construction are Chinese, and China built more wind turbines last year than any other nation.

"…[China has put] more than $11 billion in capital for renewable developments in the second quarter alone, topping the US. and EU, combined…China's efforts…speak well for ETFs designed to track the global solar energy industry, given their high exposure to Chinese companies. TAN devotes nearly 30% of its portfolio to Chinese solar corporations such as Yingli Green(YGE) Energy and LDK Solar(LDK)."

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"…[TAN and KWT] are extremely similar [but vary by volume]. TAN's top five holdings include First Solar(FSLR), 9.93% of assets; Meyer Burger(MBTN), 5.31%; Trina Solar, 5.22%; Suntech Powerholdings(STP), 4.94%; and MEMC Electronic Materials(WFR), 4.89%…[KWT's portfolio has] First Solar securing 12.76% of the fund, and MEMC, Suntech, and Meyer Burger representing 9.37%, 8.48% and 8.27%, respectively. SMA Solar Tech takes the last 4.80%…[of KWT's] largest holdings…

"…[S]olar ETFs are still a shaky play…[W]ary investors should invest accordingly…[but] the products' inherent exposure to China may prove to be a turning point for their long term performance, as the Chinese nation amps up its green efforts…If strength is in the cards for the solar industry, the more liquid TAN would be the safest choice."