The Stars Are Aligned for New China ETFs

While the month of September saw sell-offs in the U.S. tech sector, it’s an area that continues to thrive in China. That said, the stars are aligned for tech-focused funds in China, which saw the launch of exchange-traded funds (ETFs) to capture gains in the country’s biggest and brightest in the tech sector.

Per a CNBC report, four ETFs “launched in China this week tracking the Shanghai stock market’s Star 50 Index, a collection of the 50 largest stocks on the tech-heavy Star Market. The Star 50 Index is up nearly 50% this year.”

“When I say these are some of the biggest companies you’ve never heard of, I’m talking about NetEase or Tencent Music, which is bigger than Spotify if you look at their total audience,” said Tim Seymour, the founder and chief investment officer of Seymour Asset Management.

“Ant Financial is going to come to market and be bigger than almost every other financial company in the world,” Seymour added. “Certainly in payments, it’s going to be a smaller company than Visa and Mastercard, but it won’t be that far off of where JPMorgan is and it’ll be bigger than Bank of America and PayPal and all these other names.”

^NAOMXCNT data by YCharts

Back in the U.S., here are a couple of China-focused funds to consider:

1. Xtrackers CSI 300 China A-Shares ETF (NYSEArca: ASHR): seeks investment results that correspond generally to the performance, before fees and expenses, of the CSI 300 Index. The fund will normally invest at least 80% of its total assets in securities of issuers that comprise the underlying index. The underlying index is designed to reflect the price fluctuation and performance of the China A-Share market and is composed of the 300 largest and most liquid stocks in the China A-Share market. The underlying index includes small-cap, mid-cap, and large-cap stocks.
2. Xtrackers MSCI China A Inclusion Equity ETF (NYSEArca: ASHX): The investment seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI China A Inclusion Index. The fund will normally invest at least 80% of its total assets in securities (including depositary receipts in respect of such securities) of issuers that comprise the underlying index. The underlying index is designed to track the equity market performance of China A-Shares that are accessible through the Shanghai-Hong Kong Stock Connect program or the Shenzhen-Hong Kong Stock Connect program.

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