Bosera Asset Management has repurposed one of its Hong Kong-listed ETFs to provide exposure to companies listed on Shanghai Stock Exchange’s innovative STAR Market.
Bosera Asset Management has become the second issuer to introduce an SSE STAR Market ETF on the Stock Exchange of Hong Kong.
The Bosera FTSE China A50 Index ETF has become the Bosera STAR 50 Index ETF.
Previously linked to the FTSE China A50 Index, the fund now tracks the SSE Science and Technology Innovation Board 50 Index, an index known informally as the ‘SSE STAR 50’.
It is available to trade on the Stock Exchange of Hong Kong in Hong Kong dollars (2832 HK) and Chinese renminbi (82832 HK).
The change took effect on 18 February.
STAR Market is perceived as China’s equivalent to Nasdaq, offering a less-cumbersome route to public markets for home-grown, high-growth science and technology companies. It was established in July 2019 as a means to promote innovation in China by supporting investment in ambitious, emerging companies from new technology sectors.
The platform is currently home to more than 220 firms with a total market value in excess of $550 billion. While the majority of STAR-listed firms hail from the information technology sector, including chipmakers and software designers, the platform also hosts firms from a diverse range of new-generation industries including biomedicine, new energy, advanced equipment manufacturing, and environmental protection.
The so-called SSE STAR 50 comprises the 50 largest securities listed on the STAR Market while accounting for liquidity constraints. Constituents in the index are weighted by float-adjusted market capitalization while capping the weight of any single stock at 10% and the aggregate weight of the top five constituents at 40%.
As of 19 February, information technology stocks accounted for nearly two-thirds (64.3%) of the index weight followed by stocks from the healthcare (10.9%), industrials (8.7%), and telecommunications (7.3%) sectors. The largest single stock positions were Semiconductor Manufacturing International (9.1%), Montage Technology (8.4%), Beijing Kingsoft Office Software (7.5%), Shenzhen Transsion (7.3%), and Advanced Micro-Fabrication Equipment (6.1%).
The ETF’s ongoing charges figure is capped at 0.88%.
The change in fund strategy comes just one week after CSOP Asset Management launched the first ETF in Hong Kong linked to the SSE STAR 50 Index. The CSOP STAR 50 Index ETF (3109 HK) is available in Hong Kong dollars and comes with a management fee of 0.99%.
The decision to repurpose Bosera’s China A50 ETF, rather than launch a new product, was likely influenced by the fund’s meager assets compared to larger rivals. Shortly before the change in mandate, the ETF contained around HK$15m ($2m) compared to HK$17 billion ($2.2bn) for the iShares FTSE A50 ETF (2823 HK) and HK14.7bn ($1.9bn) for the CSOP FTSE China A50 ETF (2822 HK).