The recent approval of the first batch of exchange-traded funds (ETF) for the Shanghai Stock Exchange’s STAR Market will give domestic retail investors far greater access to China’s tech giants.
On 22 September four Chinese financial institutions, including Huatai-Pinebridge Investments, China AMC, E Fund Management and ICBC Credit Suisse Asset Management, issued the first batch of STAR Market 50 Index ETF’s.
The move came less than two weeks after the China Securities Regulatory Commission (CSRC) gave its approval for the launch of first ETF’s that track the STAR Market 50 Index.
The ETF’s drew 100 billion yuan (approx. USD$14.1 billion) in cumulative investment on Tuesday, five times the target value of 20 billion yuan. The STAR 50 Index is currently trading at 80x earnings, as compared to 36x for the NASDAQ.
The minimum investment threshold for new STAR Market ETF’s is just 1000 yuan, making them highly accessible to retail investors seeking to profit from the rise of China’s tech sector.
Just prior to the launch of the ETF’s the Shanghai bourse gave its approval to the listing of Chinese fintech giant Ant Group on the STAR Market.
Ant Group’s dual listing in Shanghai and Hong Kong is on track to be the biggest IPO in history, with a projected fund-raising amount USD$35 billion.
While the new STAR Market ETF’s cater to the retail investors that drive China’s stock market, plans are already in place to develop ETF’s which cater to overseas investors.
KraneShares has already submitted an application with US regulators to list its KraneShares SSE STAR Market 50 Index ETF on NYSE Arca under the ticker KSTR.