This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

An ETF For China's Smartphone Market

Stocks in this article: CHIB CQQQ GOOG

The thinly traded Global X China Technology ETF (CHIB) is not a spectacular pick for investors, given the lack of interest in its shares, but its portfolio has solid exposure to companies that will cash in on smartphones running Google's (GOOG) Android operating system and benefitting from a more accessible Internet.

CHIB launched roughly the same time as Claymore/AlphaShares China Technology (CQQQ). While I continue to favor CQQQ as a pure technology ETF, CHIB's large telecom exposure, previously a handicap, is now a strength thanks to the emerging smartphone market.

China announced a telecom restructuring in 2008, which shook up the industry and created a third wireless competitor to China Unicom (CHU) and China Mobile (CHL). The industry was hammered by the associated costs of restructuring and new regulations, and the stock prices of the companies involved declined.

Overall, this episode highlighted risks inherent of investing in state-owned enterprises (SOE); such risk is one reason why I have consistently favored Claymore/AlphaShares China Small Cap (HAO) over iShares FTSE/Xinhua China 25 (FXI). The government can step in at any time and change the rules on an industry, something that has hit the other sectors before. However, with SOEs, the government can also change the management and the company's assets and business lines.

Assuming investors opt for HAO over FXI to satiate their China exposure needs, the former is notably low on telecom exposure. Additionally, although HAO maintains some technology exposure at 12% of assets, I feel that a Chinese ETF should cover this fast-growing sector to a greater degree. With telecom restructuring in the rearview mirror, investors can focus on the future: smartphones.

Here's what's developing in the China smartphone market. Taiwanese chip maker Mediatek, a top 10 holding in iShares MSCI Taiwan (EWT), is targeting the low end of the consumer market in China with a new Android chipset. Whereas iPhone 4 will cost a Chinese consumer more than $1,000 dollars (The minimum wage in Shanghai, China's richest city, comes to about $2,000 per year), the Mediatek chips will be in phones that cost one-tenth that amount, yet carry nearly all the same functions and applications.

Android is an open-source operating system, and China Mobile has worked on making the Android operating system more hospitable to China's market, dubbing the operating system OPhone. Lenovo is already selling a device called the OPhone in China and Motorola (MOT) has also launched a phone using this software.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,959.44 +154.64 0.87%
S&P 500 2,078.54 +7.89 0.38%
NASDAQ 4,781.4240 +16.0440 0.34%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs