Global X launches China tech innovators fund | Australian Markets

Exchange traded fund (ETF) specialist Global X has launched its latest ETF focusing on listed technology innovators in China and Hong Kong.

The China Tech ETF (DRGN) is a passively managed fund monitoring the Global X Tech 20 Index – a proprietary index offering pure-play publicity to the Chinese tech sector.

Based on Global X’s simulations, the Index has returned 8.0% to buyers over the earlier three years, and seven.1% within the 12 months so far.

Among essentially the most high-profile of the DRGN’s 20 holdings embody diversified technology company Tencent (proprietor of social media and funds platform WeChat), making up 8.6% of the fund, electric vehicle producer BYD (9.0%), and e-commerce giant Alibaba (7.8%).

Commenting on the launch of the new fund, Global X senior investment strategist Billy Leung famous the fund avoids investment in state-owned entities and financials, with publicity to industries reminiscent of AI, automation, and semiconductors which might be “historically underrepresented in existing China-focused ETFs”.

This, he stated, makes the DRGN “an attractive addition to both direct and institutional investors seeking direct, high-conviction allocation to China’s key growth industries without dilution from other markets.”

Leung recognised the deep foundations of China’s booming technology sector – a vital springboard for additional innovation.

“China’s technology sector is constructed on a long time of industrial growth and infrastructure investment. This deep basis has given rise to a huge innovation ecosystem from manufacturing to automation and AI.

“With the digital economy projected to exceed 55% of China’s GDP by 2030, we are only beginning to see the transformational impact on productivity across all sectors and help secure the country’s long-term competitiveness.”

Leung concedes that whereas China’s market has been “unloved over the last 24 months due to sentiment-driven concerns around regulation, geopolitics, and macro growth”, there are indicators of restoration – even within the midst of a technical trade embargo with the US.

“[Earnings] visibility is improving, operational momentum is returning, and strategic sectors like AI, EVs, and semiconductors are beginning to scale making this an inflection point for investors focused on fundamentals.”

Global X stated it expects DRGN to build up round $40 million over its first 12 months of trade.

The DRGN attracts a management charge of 0.45% each year.

The launch of the DRGN brings Global X’s 45 ETFs in market.