Global X rolls out China thematic ETFs on LSE

Apr 3rd, 2023 | By | Category: Equities

New York-based Global X has cross-listed its suite of China-focused thematic equity ETFs on London Stock Exchange.

Rob Oliver, Head of Business Development for Global X ETFs in Europe

Rob Oliver, Head of Business Development for Global X ETFs in Europe.

The four funds target companies operating within industries linked to clean energy, electric vehicles, cloud computing, and biotechnology investment themes.

Available in US dollar and pound sterling share classes, they are the Global X China Clean Energy UCITS ETF (USD: CCLN LN; GBP: CCLG LN), Global X China Electric Vehicles UCITS ETF (USD: CAUT LN; GBP: CAUG LN), Global X China Cloud Computing UCITS ETF (USD: CCLD LN; GBP: CCDG LN), and Global X China Biotech UCITS ETF (USD: CBIO LN; GBP: CBIG LN).

The ETFs are also listed on Deutsche Börse Xetra, SIX Swiss Exchange, and Borsa Italiana. Each comes with an expense ratio of 0.68%.

According to Global X, the funds are designed to appeal to investors who wish to access strategically important industries within China as the country’s growth prospects get reinvigorated following the end of strict “zero-Covid” measures.

Rob Oliver, Head of Business Development in Europe at Global X ETFs, commented: “The Chinese government has shifted its investment focus toward technology and sustainability which creates key opportunities for investors following its recent economic re-opening. I am thrilled that Global X is launching these key China-related funds on London Stock Exchange, providing European investors with access to some of the country’s most promising growth sectors.”

Methodology

The funds are linked to Solactive indices which select their constituents from an initial universe of companies that are headquartered in China or Hong Kong. Eligible share types include Hong Kong listings, American Depository Receipts, and Chinese A-shares that are accessible through the Stock Connect program.

Each index harnesses data from FactSet to screen the universe for firms operating within certain industries related to the underlying theme. It then uses a natural language processing tool to further narrow down the selection pool to companies that are closely aligned with the theme by searching for related keywords within company documents. Firms deemed to have only marginal exposure to the theme will be removed.

The selection process targets 20 stocks for the clean energy and electric vehicle indices and 30 for the cloud computing and biotechnology indices. The largest stocks are generally chosen while promoting diversification across industries and aiming to limit turnover. Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 9%.

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