Chinese Semiconductors


ChinaAMC lists actively managed index tracking Chinese semiconductor ETF

ChinaAMC, one of Asia’s largest asset managers, is listing an ETF that invests in Chinese semiconductor companies. The ChinaAMC CNI Semi-conductor Chip ETF (159995) will be both actively managed and track an index. (No, that’s not a typo).  It appears to be very similar to – and potentially a copycat of – a successful ETF owned by Gungfa Fund Management, which tracks the same index and has a similar fund name.

The fund will invest in Chinese semiconductor companies listed on the Shenzhen and Shanghai exchanges. To be included in the index, companies must have traded for at least six months and be sufficiently liquid. They then get their financial statements inspected by the fund’s managers to ensure there have had no bad financial statements or blowout losses in recent years. Finally – my favourite part – the fund manager then ensures that the companies share prices does not wobble during “inspection periods”. 

Great fund – honest factsheets

The factsheet that comes with this listing – it’s in Chinese, we just used Google Translate – was a wonderfully honest document. It says that the Chinese semiconductor market is helped out by the Chinese government and its “import substitution” policies. It adds that Chinese semiconductors are bound to benefit further thanks to added stimulus, which will be dressed up as national security measures.

It’s all true, of course. Semiconductor companies are volatile as anything. But long term the good ones – Intel, Nvidia, Taiwan Semiconductor – make some of the best investments there are. Chinese semiconductors will be the same, one suspects. And now might also be a decent time to buy as virus fears have suppressed asset values.