CSOP launches cloud computing ETF in Hong Kong

May 17th, 2021 | By | Category: Equities

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CSOP Asset Management has launched a thematic equity ETF in Hong Kong providing exposure to US and Chinese companies operating in the cloud computing sector.

CSOP launches cloud computing ETF in Hong Kong

CSOP has launched a new ETF in Hong Kong, targeting cloud computing companies in the US and China.

The CSOP Global Cloud Computing Technology Index ETF (3194 HK) has listed on the Stock Exchange of Hong Kong (SEHK) and comes to market with around $10 million in assets.

It trades in Hong Kong dollars and has ongoing charges estimated to be 1.50%, which includes a management fee of 0.99%.

The cloud computing industry has been one of the strongest growing segments of the global technology sector in recent years, a trend that has accelerated during the Covid-19 pandemic.

Global research firm Gartner notes that worldwide spending on public cloud services is expected to reach $332 billion in 2021, an increase of 23.1% from 2020.

The US is the most significant public cloud market with the sector being dominated by the Big Tech giants. Amazon, Microsoft, and Google accounted for approximately two-thirds of the global cloud computing market in 2019.

China appears poised to play an increasingly larger role, however, supported by government initiatives driving new infrastructure development. The country’s public cloud market is predicted to grow at a compound annual growth rate of 31% to reach RMB 375bn by 2023, according to the China Academy of Information and Communications Technology.

Methodology

The ETF gains its exposure by tracking the Solactive Global Cloud Computing Technology Index through physical replication using a sampling strategy.

Constituents are selected from a universe of stocks listed on NYSE, Nasdaq, or SEHK that have an average daily trading volume of at least $1m.

The index harnesses FactSet’s Revere Business Industry Classification System to identify companies operating in certain industries linked to the cloud computing theme. The methodology selects the 50 largest eligible companies while ensuring at least ten SEHK-listed stocks are included in the index.

Constituents are weighted by market capitalization subject to a single stock cap of 5%. The index is rebalanced on a quarterly basis.

Stocks from the information technology sector dominate, accounting for three-quarters of the index weight. The majority of the remaining exposure is allocated to communication services (approx. 15%) and consumer discretionary (10%) sectors.

Notable positions include Oracle (7.2%), Alphabet (6.2%), SAP SE-Sponsored (5.9%), Microsoft (5.8%), Amazon (5.6%), Adobe (5.6%), Salesforce.com (5.2%), Intuit (5.1%), and Alibaba (4.5%).

Investors looking to target the Chinese cloud computing sector more specifically may wish to investigate the $140m Mirae Asset Horizons China Cloud Computing ETF (2826 HK). This fund tracks the Solactive China Cloud Computing Index and comes with an expense ratio of 0.68%.

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