New China ETFs Test Investors’ Appetite Amid Sino-US Tech War and Market Turmoil

A man wearing a protective mask is seen inside the Shanghai Stock Exchange building in Shanghai’s Pudong financial district, China, Feb. 28, 2020 as the country is hit by the new coronavirus outbreak.

SHANGHAI, Sept 23 (Reuters) – Five Chinese technology-focused EFAs opened on Friday, testing investors’ appetite for chipmakers, new materials producers and machine tool makers amid an escalating Sino-U.S. technology war and a global slump in tech stocks.

New exchange-traded funds (ETFs) were granted regulatory approval at a high rate over the weekend in an effort to shore up technology stocks battered by authorities ahead of next month’s politically key Communist Party congress. The approval took two days, compared to other funds, according to regulatory filings.

Two of the EFAs invest in the stocks of the 50 largest chipmakers listed on the Shanghai Star market, including Semiconductor Manufacturing International Corp (SMIC) ( 0981.HK ) and Montage Technology Co ( 688008.SS ).

Two others, such as Western Superconducting Technologies Co ( 688122.SS ) and Ningbo Ronbay New Energy Technology Co ( 688005.SS ), are investing in the largest makers of key strategic materials listed on STAR.

Another new ETF will invest in top machine tool makers such as Avic Aviation Hi-Tech Co ( 600862.SS ).

The EFS fundraise, which ends next Tuesday, comes amid a global sell-off in tech stocks, as aggressive US monetary tightening – including another big interest rate hike by the Federal Reserve on Wednesday – threatens appetite. Read more

It also comes amid heightened geopolitical tensions and technological rivalry between China and the United States.

The Biden administration has taken new steps in recent weeks to support domestic technology sectors and cut economic dependence on China, sending shares in Chinese biotech and new energy stocks down. Read more

The United States, which is vying for technological supremacy over China, “seeks to crush China’s technological progress and arm the supply chain of high-tech industries critical to US national security,” said Caiwen Wang, China strategist at alternative asset management firm Clocktower. group.

“The whole world has shifted from value-oriented to security-oriented,” said Daisy Lee, a fund manager at EFG Asset Management, adding that the United States is looking to revive its manufacturing industry.

Further Sino-US tensions are predicted to continue.

Shanghai’s technology-focused STAR market — which Beijing hopes will support China’s technological self-sufficiency — has fallen roughly 30% this year.

The lightning approval of ETFs comes as securities regulators have vowed to maintain market stability ahead of the 20th Party Congress, which starts on October 16. Read more

Reporting by Samuel Shen, Jason Shue and Brenda Goh; Edited by Anna Nicolasi da Costa

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