The Hong Kong office of South Korean asset manager Mirae Asset Global Investments has launched three new ETFs targeting thematic exposures within China or the wider Asia region.

JH Rhee, Chief Executive Officer of Mirae Asset Global Investments (Hong Kong).

Listed on HKEX under Mirae’s Global X brand, the funds target companies linked to the Asian semiconductor, Chinese e-commerce & logistics, and Chinese games and entertainment investment themes.

They are the Global X Asia Semiconductor ETF (3119 HK), the Global X China E-commerce and Logistics ETF (3124 HK), and the Global X China Games and Entertainment ETF (3117 HK).

Each fund has been listed in Hong Kong dollars and comes with expected ongoing charges over one year of 0.68%.

Jung Ho RHEE, Chief Executive Officer of Mirae Asset, said: “As Asian companies at the cutting edge of disruptive innovation continue to reshape the region’s economy, we’re delighted to offer our investors the opportunity to access the exciting themes of Asia semiconductors, China e-commerce and logistics, and China games and entertainment through targeted and efficient investment solutions.”

The launches bring the number of ETFs within Mirae’s Hong Kong-listed thematic growth suite to 12. The other nine funds provide access to a range of long-term disruptive trends in China including clean energy, consumer brands, biotechnology, global leaders, semiconductors, robotics & AI, electric vehicle & batteries, cloud computing, and broad innovation.

Semiconductor

The Global X Asia Semiconductor ETF, which is the firm’s first regional thematic ETF in Hong Kong, invests in Asia-based companies involved in the production and development of semiconductors and semiconductor equipment.

Global demand for semiconductors is expected to remain robust over the long term due to their integral role in a wide range of innovative new technologies such as artificial intelligence, the internet of things, 5G communications, and electric and autonomous vehicles.

Asia is ideally positioned to benefit from this trend as roughly three-quarters of the world’s semiconductors are currently manufactured in the region with several companies already established as global leaders in chip production, chip assembly, and the manufacture of semiconductor equipment and materials.

The ETF gains its exposure by tracking the FactSet Asia Semiconductor Index which consists of stocks listed in Hong Kong, Japan, South Korea, and Taiwan, as well as American Depository Receipts (ADRs) of companies incorporated in these countries. Constituents must have a market capitalization above $1 billion and an average daily trading volume greater than $2 million.

The methodology screens for companies deriving at least 50% of their revenue from semiconductor-related industries, according to FactSet’s Revere Business Industry Classification System (RBICS). The index consists of the largest 16 stocks while selecting a certain number of companies from each of five semiconductor categories – semiconductor foundries (the three largest stocks are selected), semiconductor manufacturers (seven), capital equipment (two), assembly & distribution (two), and materials & components (two).

Constituents are weighted by float-adjusted market capitalization subject to a security cap of 20% and a country cap of 50%.

E-commerce & logistics

The Global X China E-commerce and Logistics ETF offers targeted exposure to the fast-growing e-commerce and logistics theme in China. With highly innovative business models that combine online retail, social media, live streaming, and group buying, China’s e-commerce platforms have revolutionized the country’s retail industry with online sales set to surpass $3 trillion by the end of 2022.

In addition to a sophisticated digital infrastructure, China’s expansive logistics network played a crucial role in enabling the rapid rise of e-commerce. The country’s logistics companies are increasingly harnessing innovation and technology to optimize their operational efficiencies, and China’s smart logistics market is one of the fastest-growing segments within the industry.

The ETF gains its exposure by tracking the FactSet China E-commerce and Logistics Index which consists of Hong Kong and China-incorporated companies listed either in mainland China, on the Stock Exchange of Hong Kong, or in the US. Eligible securities must have an average daily trading value above HK$20m.

The index also harnesses FactSet’s RBICS to screen for companies deriving at least 50% of their revenue from any of 26 e-commerce and logistics-related industries. Eligible industries include airport infrastructure, rail transportation, autonomous drones, container shipping, express couriers, food delivery, logistics providers, as well as internet-based apparel, accessories, electronics, and department stores, among others.

The largest 30 eligible securities are selected to form the index with a maximum of five stocks chosen from any RBICS industry. Constituents are weighted by float-adjusted market capitalization subject to an individual cap of 6%.

Games & Entertainment

The Global X China Games and Entertainment ETF offers access to Chinese companies in entertainment-related industries such as online gaming, sports and performing arts entertainment, games and entertainment software, media content providers, and media production and broadcasting.

China already has one of the world’s largest entertainment and media markets but Mirae believes the country’s expenditure on entertainment has ample room for further growth. With one of the world’s most sophisticated mobile payment infrastructures and a rapidly expanding 5G network, growth will mainly be driven by online forms of entertainment such as internet-based games, e-sports, and video and music streaming platforms.

The ETF gains its exposure by tracking the FactSet China Games and Entertainment Index which has the same starting universe for stock selection as the above e-commerce and logistics index.

The index also harnesses FactSet’s RBICS to screen for companies deriving at least 50% of their revenue from any of 23 games and entertainment-related industries. Eligible industries include online gaming, smartphone games, console games software, recreation providers, video entertainment, cruise lines, spectator sports, and performing arts entertainment, among others.

The largest 30 eligible securities are selected to form the index which is weighted by float-adjusted market capitalization subject to an individual cap of 9%.