KraneShares launches Europe’s first ‘SSE STAR 50’ ETF

May 27th, 2021 | By | Category: Equities

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KraneShares has unveiled the first ETF in Europe tracking the so-called SSE STAR 50, providing exposure to Chinese companies listed on Shanghai Stock Exchange’s innovative STAR Market.

KraneShares launches China 5G and semiconductor ETF

Jonathan Krane, CEO of KraneShares.

The KraneShares ICBCCS SSE Star Market 50 Index UCITS ETF (KSTR LN) has listed on London Stock Exchange in US dollars and comes with an expense ratio of 0.82%.

The fund has been brought to market in collaboration with ICBC Credit Suisse Asset Management (ICBCCS), which acts as sub-adviser to the ETF.

ICBCCS is a joint venture between the Industrial and Commercial Bank of China and Credit Suisse.

The STAR Market was developed to promote home-grown, high-growth science and technology companies in mainland China. Firms that list on the market can avoid much of the bureaucratic red tape associated with traditional main board listings.

Since its establishment in July 2019, the market has become one of the largest venues for IPOs globally and a premier listing platform for prominent Chinese ‘unicorns’ – privately held start-up companies valued at over $1 billion.

In just over a year, the STAR Market facilitated 200 companies to raise $44 billion. The increase in fund-raising activity on Chinese exchanges last year is mainly attributable to new STAR Market listings which accounted for 47% of capital raised across China’s Mainland A-share market in 2020.

While the STAR Market primarily attracts information technology companies, such as 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.

Eligible STAR Market A-shares have also been included in the China-Hong Kong Stock Connect from February, highlighting how the segment is increasingly opening up to international investors.

Index methodology

The fund tracks the SSE Science and Technology Innovation Board 50 Index – dubbed SSE STAR 50 Index and known as the ‘Nasdaq of China’ – which comprises the 50 largest securities listed on the STAR Market while accounting for liquidity constraints.

Constituents 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 26 May, information technology stocks account for nearly two-thirds (59.7%) of the index weight followed by stocks from the healthcare (14.6%), industrials (11.7%), and telecommunications (5.8%) sectors. The largest single stock positions are Semiconductor Manufacturing International (9.2%), Beijing Kingsoft Office Software (7.3%), Shenzhen Transsion (5.8%), Advanced Micro-Fabrication Equipment (5.5%), and Beijing Roborock Technology (5.3%).

‘Nasdaq of China’

Jonathan Krane, CEO of KraneShares, commented: “We are proud to offer the first ETF that provides European investors direct access to China’s STAR Market. It is a privilege to work with the Shanghai Stock Exchange, London Stock Exchange, and ICBCCS to bring this unique investment opportunity to global investors. We believe KSTR represents companies that are China’s future leaders across industries powering the growth engine of China for decades to come.”

Xiaolin Chen, Head of International at KraneShares, added: “We are very excited to bring the ‘Nasdaq of China’ investment solution to Europe. The KSTR fund presents an unprecedented opportunity for investors to access China’s onshore capital market. KraneShares is committed to continuously enriching and broadening investors’ unique access to China.”

Forest Peng, CEO of ICBCCS, said: “ICBCCS is dedicated to bringing innovative investment solutions to investors in Europe and globally. We are pleased to bring KSTR to market, in partnership with KraneShares, to enable investors to tap into the companies leading China’s next wave of development.”

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