New Chinese ETFs Test Investors’ Appetite Amid Sino-US Technology War, Market Disruption

New Chinese ETFs Test Investors’ Appetite Amid Sino-US Technology War, Market Disruption

A man in a protective mask is seen inside the Shanghai Stock Exchange building as the country is hit by a new coronavirus outbreak, in Shanghai’s Pudong financial district, Feb. 28, 2020. REUTERS/Aly Song

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SHANGHAI, Sept. 23 (Reuters) – Five Chinese tech-focused ETFs launched Friday, testing investor interest in chipmakers, new materials makers and machine tool manufacturers amid an escalating Sino-US technology war and a global flight in technology stocks.

The new batch of exchange-traded funds (ETFs) was approved by regulators in record time over the weekend, in an apparent attempt by authorities to bolster battered technology stocks ahead of the politically important Communist Party Congress next month. The approval took two days, according to regulatory authorities, as opposed to weeks for other funds.

Two of the ETFs will invest in the shares of the top 50 chipmakers listed on the Shanghai STAR market, including Semiconductor Manufacturing International Corporation (SMIC) (0981.HK) and Montage Technology Co (688008.SS).

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Two others will put money into the largest makers of key strategic materials listed on STAR, such as Western Superconducting Technologies Co (688122.SS) and Ningbo Ronbay New Energy Technology Co (688005.SS).

Another new ETF will invest in high-end machine tools, such as Avic Aviation High-technology Co (600862.SS).

The ETF’s fundraising, which ends next Tuesday, comes amid a global sell-off in technology stocks, as aggressive monetary tightening in the US – including another large rate hike by the Federal Reserve on Wednesday – dampens risk appetite. read more

It also comes amid heightened geopolitical tensions and technological rivalry between China and the United States.

The Biden administration has taken new steps in recent weeks to support domestic tech sectors and reduce economic dependence on China, pushing stocks in Chinese biotech and new energy lower. read more

The United States is vying for technological supremacy over China, seeking to “suppress China’s technological advances and restore the supply chain of high-tech industries critical to U.S. national security,” said Kaiwen Wang, China strategist at Clocktower , an alternative wealth management company. Group.

Daisy Li, fund manager at EFG Asset Management, said that “the whole world has shifted towards security and cost orientation,” adding that the United States is looking to revive its manufacturing industry.

They predicted more tensions between China and the US in the future.

Shanghai’s tech-focused STAR market — which Beijing hopes will fund China’s tech self-sufficiency — is down about 30% this year.

The lightning-fast approval of the ETFs also comes as securities regulators have vowed to maintain market stability ahead of the 20th party conference, to be held from Oct. 16. read more

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