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global x lithium & battery tech etf: why this etf is a buy-and-hold

by:HGB     2020-06-18
Although lithium has many uses in medicine, or as a component of heat-resistant glass, its main purpose is lithium.
Ion batteries for electric vehicles (EVs).
Lithium for batteries is 1 times more than lithium for other purposes.
Global X lithium battery ETF (LIT)
Seeking to track price appreciation (or fluctuation)
By tracking the Solactive Global Lithium Index (SOLLIT).
As an ETF, the total cost rate is 0.
Compared with many mutual funds, 75% per cent is relatively low.
So as demand for electric vehicles grows, is it profitable to invest in ETFs?
First, let\'s take a closer look at the composition of the ETF, as disclosed here.
According to the Global X profile as of December, the top 10 shares of Groupon.
31. Three limited companies.
Seven more companies.
These companies are (
Sort By hold size)FMC Corp. (FMC)
Yabao company. (ALB)
, Quimica y Minera (SQM), Tesla Inc. (TSLA), EnerSys (ENS)GS Yuasa(OTCPK:GYUAF)
And Panasonic. (OTCPK:PCRFY).
Since GS Yuasa and Panasonic are OTCPK stocks, their EPS and PE values are inconsistent with your expectations for the stock listed on the exchange: Looking for the latest data provided by Alpha to show that this
The 10 combo moved a little bit and now includes four limited companies
Six more companies.
Panasonic no longer belongs to top-10 list.
So, what should investors willing to invest in Groupon first consider?
Since ETFs are focused on the lithium battery market, the future demand for electric vehicles is crucial.
According to Bloomberg\'s Electric Vehicle Outlook, global electric vehicle sales are expected to increase significantly to 30 vehicles.
Compared with sales in 2030, it doubled in 2017. (Source)
This is expected, according to many analysts, because electric cars will eventually be cheaper than cars with gasoline or diesel engines.
So, given the electric car market, the most important question is not: \"will demand rise ? \"?
\"But\" will profit margins rise as prices fall?
\"Volvo, the Scandinavian carmaker, expects the profit margin of electric vehicles to reach 2025 at the earliest.
So far, automakers \"have acknowledged the higher cost of components,
Profit margins will rise in the first few years
There will be significant improvements over the next few years. (Source)
This optimistic outlook for Volvo seems
In line with other automakers such as Volkswagen, who plan to \"produce 22 million electric vehicles over the next decade,\" while deepening cooperation with Ford Motor in this regard. (Source)
So, if we assume that not only does the demand for electric vehicles increase, but the profit margin increases, then the automotive industry is likely to embrace electric vehicles more boldly than it is now.
Then it makes sense to assume that all or at least the vast majority of vehicles in a portfolio are EV versions --
Although the same car model can be provided as a hydrogen fuel cell version or as a traditional combustion version.
Indeed, many automakers such as Ford (F)or Peugeot (OTCPK:PEUGF)
Focus on platforms that can be manufactured with different types of engines in order to be more flexible and efficient.
However, will the growing demand for electric vehicles lead to an increasing demand for lithium batteries in a 1:1 ratio?
It is widely believed that lithium-
Ion batteries are mainly used in electric vehicles, in fact, the electric vehicle market is an important part of the whole lithium
Ion battery sales.
When electric cars were still rare in the automotive world in 2015, electric cars had already contributed about $5.
Lithium 8 billion
In dollars, the sales of ion batteries are the second largest part of the market.
The biggest market segment is mobile phones, tablets and laptops, generating about $6 in revenue.
2 billion of sales,
The distribution of market share may change soon.
Given that the US electric vehicle market accounted for only 1% of the car market in 2015, and that figure is expected to rise to 35% by 2040, it is likely that the sales of electric vehicles will increase significantly in the next decade --
Or the next 20 years, depending on who you ask.
Will completely affect the entire Lithium-
Ion battery demand
Moreover, experts do not believe that the United States isS.
It will become China\'s largest auto market by then.
China\'s demand for electric vehicles is expected to be as high as that of the EU and the US by 2040S. combined. (Source)
In fact, with the capacity of the battery made in China reaching 16, China is already a big power of lithium batteries.
Became the world\'s largest producer of lithium in 2016ion batteries.
South Korea ranked second with the ability of 10 people.
5 GWh is followed by the United States with a capacity of only 1 GWh.
2020 these figures will all rise to 107.
5 GWh, China, to 38.
The United States and GWh on the 23rd were 0. GWh in South Korea is 0.
The EU is likely to lag behind, and China is expected to remain in its position for a longer period of time. (Source)
This is not to say, however, that the EU will be ignored.
According to the two
The European Commission plans to increase production capacity in the next 20 years to meet domestic demand.
However, the EU acknowledged that this important shift in the European auto industry also requires foreign investment from at least some major players such as LG Chem and Tesla. -
Participants in the ETF.
Although there are currently less than 4 million electric vehicles on European roads, the European Commission expects this figure to rise sharply, with 50 to 0. 2 billion electric vehicles in Europe by 2028, there were 0. 9 billion vehicles by 2040.
While this estimate from the European Commission provides us with a fairly broad range, it makes it clear that even in the European market, many analysts expect, in terms of electric vehicles and lithium, sales in the Chinese market will significantly exceed the Chinese market --
Ion batteries cannot be ignored. Even lithium-
Ion battery manufacturers based in Europe should get the share of cake they deserve, because battery sales are also expected to increase from below 77 GWh in 2018 to between 250 and 1100 GWh in 2028 to complete 4000GWh by 2040.
However, even the European Commission expects the European lithium market to remain small.
By 2028, the total market share of ion batteries was between 7% and 25%.
This estimate is very good.
Consistent with the estimates of other analysts in the above paragraph. (Source)
So, yes, now investors investing in lithium should see well that demand and lithium prices have risen almost equally over the next year or two.
However, investing in the ETFs is not the same as investing in lithium futures contracts, which will be a direct investment in this commodity.
Global X lithium technology ETF (LIT)
Currently consists of 50 holding companies (as of 3/29/19).
The largest group of stocks belongs to the basic materials group, accounting for about 60%, and the second group consists of science and technology stocks, accounting for about 28%.
This is not only an investment in the commodity market, but also in the technology sector.
Also, investors should know that although China is expected to be the biggest market for electric cars and lithium batteriesto long-
According to the national segmentation of fund stocks, American stocks are its largest component, about 45%, followed by South Korea and Japan, about 10 to 11%, respectively, china is only a little more than 5%, ranking seventh.
This, of course, is due to the fact that Groupon is tracking solocity when investing in Chinese stocks, which often brings additional risks such as geopolitical (including regulatory and monetary risks. The trade-
Off believes that the focus on Chinese companies may bring more returns in the medium term, thus creating potential huge opportunity costs for investors avoiding the Chinese market.
If we consider a clear focus on the TMT industry segment of material industry Ie.
I expect the ETF to be a good buy-in with a focus of around 60%. and-
For an investor who likes to increase exposure to the commodity market, long-term investment opportunities are maintained.
As commodity markets and technology sectors are facing increasing volatility during periods of geopolitical turmoil, I don\'t think Groupon is an equally good investment opportunity for short-term investorsterm investor.
The article covers the market outlook for the next 20 years and clearly sets a personal record.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.
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