Hantoo Asset Management, Reopening Expectations... Recommends China Stock Market Tracking ETFs

Korea Investment Trust Management announced on the 16th that the returns of two exchange-traded funds (ETFs) investing in the Chinese stock market (ACE China Mainland CSI300 Leverage (Synthetic) ETF and ACE China Mainland CSI300 ETF) have been rebounding since the beginning of this year.

Since the beginning of the year, the returns of the ACE China Mainland CSI300 Leverage (Synthetic) ETF and ACE China Mainland CSI300 ETF are 17.05% and 7.51%, respectively (as of the 15th). This means that the returns of the two ETFs, which had recorded poor performance of -23.86% and -9.19% over the past year, are now reversing upward.

The Chinese stock market showed sluggish performance over the past two years due to strict lockdown policies caused by COVID-19, but it has been experiencing a significant upward trend this year. This is thanks to expectations of reopening (resumption of economic activities) following the easing of lockdown policies. In particular, on the 13th, the conclusion of the Two Sessions (National People's Congress and Chinese People's Political Consultative Conference), China's largest political event, raised expectations for economic stimulus policies.

The ACE China Mainland CSI300 ETF, launched in 2012 as the first domestic product investing in China Mainland, tracks the CSI300 index, a representative Chinese index. The ACE China Mainland CSI300 Leverage (Synthetic) ETF tracks twice the daily return of the CSI300 index.

The 'CSI300 index' consists of 300 stocks selected based on market capitalization, liquidity, trading volume, and financial status of listed companies among China A-shares listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange. As of the previous day, the sector composition includes Financials (21.38%), Industrials (15.59%), Consumer Staples (15.04%), IT (14.79%), Materials (10.03%), Consumer Discretionary (8.09%), Healthcare (8.07%), Utilities (2.57%), Energy (1.92%), and Real Estate (1.73%). Major stock holdings include KWEICHOW MOUTAI CO LTD-A (6.2%), CONTEMPORARY AMPEREX TECHN-A (3.24%), PING AN INSURANCE GROUP CO-A (2.83%), and CHINA MERCHANTS BANK-A (2.47%).

The reopening effect in China is also becoming visible. The non-manufacturing PMI (Purchasing Managers' Index), centered on the service sector, has rebounded, and in February, the manufacturing PMI also rose above the baseline of 50. In particular, the consumption sectors such as travel, leisure, and luxury goods are leading the demand recovery. International credit rating agency Fitch stated, "Although (China's consumer index) is still below the pre-COVID-19 pandemic level," it also forecasted that "with improved consumer sentiment and eased COVID-19 prevention measures, both domestic demand and exports will increase."

Nam Yong-su, Head of ETF Management at Korea Investment Trust Management, said, "China's GDP growth rate recorded 4.9% in the fourth quarter of last year, showing a rapid economic recovery after the COVID-19 pandemic," and added, "This year, supported by the easing of lockdown policies and economic stimulus measures, a stronger recovery is expected, so we recommend the ACE China Mainland CSI300 ETF investing in the Chinese stock market."

Meanwhile, the ACE China Mainland Leverage CSI300 ETF and ACE China Mainland CSI300 ETF are performance dividend-type products, and past returns do not guarantee future returns. Principal loss may occur depending on management results.

This content was produced with the assistance of AI translation services.