3 ETFs For China/Australia Energy M&A
China's voracious desire for all things energy-related, be it coal, oil or related fare, has energy producers in the world's fastest-growing major economy ready to make a deal. Well, actually a lot of deals and that deal-making could mean China sets its sights on Australia for potential targets.
Energy consultant Wood Mackenzie says Chinese companies could stakes to access about 49.4 million metric tons a year of unsold gas supply from projects in Australia, Bloomberg News reported.
Chinese firms have a hard time getting mega energy deals done in democratic counties and one needs only look back to 2005 when Cnooc (NYSE: CEO), China's largest offshore oil explorer, tried to Unocal, but was rebuffed due to political opposition.
In other words, don't expect Woodside Petroleum (PK: WOPEY) to be acquired by a Chinese firm, but Chinese energy giants have been successful with smaller deals and asset purchases, even in North America.
Here the ETFs you'll want to look at as China continues to ratchet up its energy M&A game.
1) Global X China Energy ETF (NYSE: CHIE): We've mentioned CHIE before as an ideal way to play some of the buyers in global energy M&A and maintain that view today. Cnooc and Sinopec (NYSE: SNP), Asia's largest refiner, have been busy making deals in recent months, but PetroChina (NYSE: PTR) has been oddly quiet. Remember, China's largest oil company said last year it will spend $60 billion on M&A over the next decade.
2) IQ Australia Small Cap ETF (NYSE: KROO): Energy isn't a big sector weight in KROO at just 6%, but combine it with materials and you've got 41% of KROO's weight. Some of KROO's holdings could be ideal targets for smaller deals for Chinese energy producers.
3) Global X Uranium ETF (NYSE: URA): OK, this isn't an oil or nat gas play, but there are plenty of beaten up targets in here that could be had a very reasonable prices. China is expected to be one of the lead drivers of uranium demand in coming years, so it's not unreasonable to think a uranium acquisition or two will be considered by Chinese firms (not the oil companies though).
A recent Bloomberg article highlighted several Australian uranium firms that could be takeover targets, including Paladin Energy (PK: PALAF), a top URA holding.
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