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| Mirae Asset's TIGER ETF promotional image / Courtesy of Mirae Asset Global Investments |
By Anna J. Park
With growing market expectations over China's reopening as well as its government's strong will to support the tech sector, exchange-traded funds (ETFs) tracking the country's SSE Star 50 index, otherwise known as the Shanghai Stock Exchange (SSE) Science and Technology Innovation Board 50 Index, have been posting impressive returns this year.
The SSE Science and Technology Innovation Board 50 Index is a Chinese equity market comprised of the 50 largest Chinese companies listed on the SSE Science and Technology Innovation Board (STAR Market), established in July 2019. China's contract chipmaker SMIC was also listed on the STAR Market in 2020.
According to Mirae Asset Global Investments, the SSE Star 50 Index has been showing a solid upward movement this year, reflecting the Chinese government's strong determination to foster its chip-making industry. As a consequence, Korea Exchange (KRX)-listed ETFs that track the Chinese tech index have risen by an average of about 30 percent this year alone.
Four ETFs track the SSE Star index: TIGER Synth-China STAR 50 ETF, KODEX Synth-China STAR 50, ACE Synth-China STAR 50 and SOL China STAR 50. The four ETFs listed jointly on the KRX in early January last year drew attention from local retail investors, who previously could not directly access the SSE Star market. They can only make investments in the Chinese tech market by purchasing the KRX-listed ETFs.
The performances of the ETFs have been shining this year, each posting returns of nearly 30 percent since January this year. TIGER Synth-China STAR 50 ETF has posted returns of 28.31 percent so far, the highest among the four, followed by KODEX Synth-China STAR 50 ETF with 28.03 percent. ACE and SOL ETFs logged returns of 27.1 percent and 26.24 percent, respectively.
Yet, in terms of assets under management, TIGER Synth-China STAR 50 ETF has attracted the largest sum of net assets at 219.6 billion won (165.9 million), as of April 10, while the KODEX ETF drew 49.1 billion won, SOL ETF got 11.4 billion won and ACE ETF managed 7.8 billion won.
"What is core to the productivity of ETFs tracking Chinese indexes is how to smoothly handle the ETF's structural disparity against its net asset value (NAV) for irregularities," said Lee Ka-hyun, manager at Mirae Asset Global Investments' ETF operation, explaining that the TIGER ETF's disparate ratio has been kept under control.
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