Vontobel issues a tracker certificate for the Chinese automobile sector
A new Tracker Certificates Open-End linked to the Solactive China Automobile Index is issued in Sweden (ISIN DE000VS0QCA4). With about 28 million sold cars annually, China accounts for nearly a third of the world’s automotive market. The certificate depicts the Chinese automobile sector and includes well known Chinese corporates like Geely or BYD. The Index performed about 164% in the last five years (20.11.2017).
With about 28 million sold cars annually, China accounts for nearly a third of the world’s automotive market. This is a decisive acceleration since 2009, when the country has surpassed for the first time the major automotive markets in the world, namely the United States and Japan. The reason of market growth is the massive rise of the middle class. China is experiencing rapid urbanization: the Chinese middle class is growing dynamically and incomes are rising. In this context, demand for automobiles as a means of mobility and a symbol of economic ascent, but also as an expression of the desire for individuality and independence, could be growing. That is why the Chinese market has long been the target of major international manufacturers. Major OEMs such as German Volkswagen or American General Motors are dominating the industry, even though local producers are slowly gaining ever-wider market slices.
China is to focus on battery electric vehicles (BEVs), where the government counts on bringing electric cars up by 2030. On top, Beijing issues supporting admission regulations for new cars and tax advantages. Famous Chinese car manufacturer like BYD, BAIC, Geely and Great Wall Motor could need favorable conditions to beat their competition. There are already seven hundred thousand such cars in circulation along the Chinese roads, a number that brings the country to the world's first in the industry.
Five-year-chart of the Solactive China Automobile Index - source: solactive.com
According to analysts, this trend is expected to strengthen, as the huge domestic market will support demand by favoring the creation of a strong electric car industry at first and of self-guided driving. According to newspaper New York Times US corporate Uber wants to buy 24,000 self-driving cars from Swedish car manufacturer Volvo Car Corporation. Since 2010, Volvo Cars is part of the mentioned Chinese car company Geely.
The Solactive China Automobile Performance-Index has performed about 164% in the last five years (15.11.2017). Due to its regional focus on China, volatility in the Chinese market can influence the index like it happened in the year 2015. Nevertheless the past performance is no indication for the future.
Tracker Certificates
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