Bosera launches leveraged ChiNext ETF on HKEX

May 12th, 2022 | By | Category: Equities

Shenzhen-based investment manager Bosera Asset Management has launched a new ETF in Hong Kong providing leveraged exposure to the largest Chinese A-share companies trading on ChiNext.

Bosera launches leveraged ChiNext ETF on HKEX

ChiNext is a Nasdaq-style board of the Shenzhen Stock Exchange.

The Bosera SZSE ChiNext Daily (2x) Leveraged Product (7234 HK) has been listed on the Stock Exchange of Hong Kong with a management fee of 1.48%.

The ChiNext is a Nasdaq-style board of the Shenzhen Stock Exchange (SZSE) which aims to attract innovative and fast-growing enterprises, especially high-tech firms, by offering less stringent listing standards compared to the SZSE’s  Main and SME Boards.

The ETF provides twice (+200%) the daily return of the ChiNext Index which consists of the 100 largest A-share companies listed on ChiNext, excluding firms deemed to have insufficient liquidity.

Constituents are weighted by float-adjusted market capitalization, and the index is reconstituted and rebalanced semi-annually with buffer rules helping to limit unnecessary turnover.

As of 6 May, stocks from the industrials and health care sectors dominated the ChiNext Index with weights of 31.2% and 27.9%, respectively, followed by information technology (17.7%), financials (8.9%), and consumer staples (5.3%).

Notable stock positions included Contemporary Amperex (18.9%), East Money Information (7.1%), Shenzhen Mindray Bio-Medic (4.1%), Sungrow Power Supply (3.4%), and Guangdong Wens Foodstuffs (3.4%).

The ChiNext Index has nosedived in 2022, shedding 30.2% of its value year-to-date (as of 6 May).

Global stock markets have retreated this year amid an environment of macroeconomic uncertainty including soaring inflation and rising interest rates. Chinese equities, however, have also been weighed down by the country’s strict lockdown policies as well as the risk of sanctions being imposed by the US and Europe if Beijing is deemed to have helped Moscow cushion the impact of sanctions imposed upon Russia due to its invasion of Ukraine.

Furthermore, Chinese technology companies may be feeling the brunt of China’s equity market sell-off due to regulatory uncertainties caused by the government’s ongoing crackdown on the sector.

However, the index’s recent underperformance may actually spur demand for the ETF if investors wish to express a bullish view on a bounceback in the segment.

The ChiNext index is actually up 7.6% from its recent low on 26 April, a sign that investors may be expecting the Chinese government to ease its regulatory grip in a bid to support markets and help reverse the slowdown in the country’s GDP growth rate.

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