Mirae Asset’s Global X launches two China thematic ETFs in Hong Kong

Aug 12th, 2020 | By | Category: Equities

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Mirae Asset Global Investments has rolled out two more China-focused thematic equity ETFs in Hong Kong.

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

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

The funds, which have listed on the Stock Exchange of Hong Kong, provide exposure to Chinese companies operating in the robotics & artificial intelligence and semiconductor industries.

They are linked to indices provided FactSet.

Both funds have launched under the Global X brand, which Mirae Asset acquired in 2018, and are available in both Hong Kong dollar and US dollar trading share classes.

Each comes with an expense ratio of 0.68%. Income is distributed to investors on an annual basis.

Robotics & AI

The Global X China Robotics & AI ETF (HKD: 2807 HK; USD: 9807 HK) tracks the FactSet China Robotics and Artificial Intelligence Index.

The index selects its constituents from a universe of firms domiciled in either Mainland China or Hong Kong and listed on Chinese, Hong Kong, or US stock exchanges. Firms must have a positive 12-month return on equity to be eligible for inclusion.

Using the FactSet Revere Business Industry Classification System (RBICS), the methodology selects the five largest companies from each of 12 sub-industry classifications related to the robotics and AI themes. This process aims to capture the main players throughout the robotics and AI value chain.

All the eligible constituents are then ranked in descending order according to market capitalization and the 25 largest firms are selected for inclusion.

Constituents are weighted by float-adjusted market capitalization subject to a 7% cap per security. Reconstitution and rebalancing occur semi-annually.

According to Mirae, the ETF offers exposure to companies that are at the forefront of transforming China from a traditional manufacturing economy to a high-tech superpower. Faced with a declining workforce and rising labour costs, China is increasingly looking to robotics and AI to safeguard its manufacturing competitiveness.

Semiconductors

The Global X China Semiconductor ETF (HKD: 3191 HK; USD: 9191 HK) tracks the FactSet China Semiconductor Index.

The index utilizes a similar methodology but directly selects the largest 25 securities from a list of firms that are classified to 14 RBICS sub-industries related to the semiconductor theme. A similar weighting methodology is used as described above.

Mirae notes that China’s semiconductor industry is currently undergoing transformative change. With US-China tensions intensifying, China is determined to foster a self-sufficient and globally competitive domestic chip industry. Meanwhile, next-generation technologies such as robotics, internet of things, 5G, and autonomous driving all depend on advanced chips as an essential technological component.

China, which has made bold strides in all these areas, is currently the world’s largest consumer of semiconductors. The theme is also expected to benefit from heavy spending on research and development, significant state subsidies, and a major recruitment drive to attract talent.

China’s tech transformation

Jung Ho Rhee, Chief Executive Officer of Mirae Asset Global Investments (HK), commented, “Robotics, AI, and semiconductor production are interconnected components that will play a key part in China’s tech transformation, driving economic growth. The launch of these new ETFs offers investors efficient access to the themes, as well as exposure to the vast potential of China’s technology sector.

“This demonstrates our continued commitment to offering alpha-seeking investors unique and innovative ETF products and investment solutions that exploit the disruptive trends of tomorrow.”

In July last year, Mirae Asset introduced its first China-focused thematic ETFs in Hong Kong, with funds linked to the biotech and cloud computing industries.

In January this year, it unveiled three more, this time linked to the clean energy, electric vehicle, and consumer-oriented industries.

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