KraneShares launches first SSE STAR Market ETF in the US

Jan 28th, 2021 | By | Category: Equities

KraneShares has expanded its suite of China-focused funds with the launch of the first US-listed ETF providing exposure to Chinese companies listed on the Shanghai Stock Exchange’s innovative STAR Market.

KraneShares launches China 5G and semiconductor ETF

Jonathan Krane, CEO of KraneShares.

The KraneShares SSE STAR Market 50 Index ETF (KSTR US) has listed on NYSE Arca and comes with an expense ratio of 0.89%.

The fund has been seeded with $2.5 million in assets. Distributions are made to investors on an annual basis.

The STAR Market was developed to promote home-grown high-growth science and technology companies. Firms listing on STAR  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.

From 1 February, eligible STAR Market A-shares will be included in the China-Hong Kong Stock Connect, highlighting how the segment is increasingly opening up to international investors.

Methodology

KSTR tracks the SSE Science and Technology Innovation Board 50 Index – dubbed the SSE STAR 50 Index – 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 27 January, information technology stocks accounted for two-thirds (65.0%) of the index weight followed by stocks from the healthcare (10.5%), industrials (9.1%), and telecommunications (6.1%) sectors. The largest single stock positions were Semiconductor Manufacturing International (8.8%), Beijing Kingsoft Office Software (8.0%), Montage Technology (8.0%), Advanced Micro-Fabrication Equipment (7.1%), and Shenzhen Transsion (6.1%).

Jonathan Krane, CEO of KraneShares, commented: “KraneShares is privileged to work with SSE and NYSE 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.”

Harry FU Hao, Managing Director of Global Business Development Department at the Shanghai Stock Exchange, added: “We are happy to work with the NYSE and KraneShares to provide overseas investors access to the SSE STAR Market, where star companies from China’s high-tech industries and strategic emerging industries cluster.”

Douglas Yones, Head of ETPs at the New York Stock Exchange, said: “The NYSE is committed to bringing new investment opportunities to the public by expanding the ETF ecosystem. Today’s launch of KSTR on NYSE Arca continues that mandate, giving investors access to China’s STAR Market for the first time.”

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