China Electric Vehicle ETF Attracting Strong Investor Interest

'TIGER China Electric Vehicle'
30.17% Return Since Last Month
BBIG Sector ETFs Also Show Good Returns

[Asia Economy Reporter Minji Lee] As the spread of the Delta variant virus slows and the economic recovery decelerates, investor sentiment is expanding toward stocks themed around growth in the domestic Exchange-Traded Fund (ETF) market. The China electric vehicle-related ETF surpassed 1 trillion won in net assets for the first time ever, while ETFs themed around BBIG (Bio, Battery, Internet, Game) are also recording strong performance based on favorable supply and demand.

According to the Korea Exchange on the 13th, among the ETFs listed domestically, the one with the highest return since last month was ‘TIGER China Electric Vehicle SOLACTIVE,’ which posted a 30.71% gain. On that day, the ETF surged to an intraday record high of 17,715 won, rising 2.5% compared to the previous day. It has risen about 20% just this month. It also became the first recently listed domestic ETF to exceed 1 trillion won in net assets.

Namgi Kim, Executive Director of ETFs at Mirae Asset Global Investments, said, “As Chinese consumers’ perception of electric vehicles begins to change centered on Tesla, the Chinese government is providing benefits to domestic electric vehicle companies, allowing Chinese companies to expand their market share within China. In the case of CATL, the largest battery company in China, it is accelerating its entry into the European market, and the increase in electric vehicle demand from Europe is leading to a strong performance of Chinese electric vehicle-related stocks.”

This fund invests in stocks listed in the U.S., China, and Hong Kong, using the ‘China Elective Vehicle’ index provided by the German index provider Solactive as its benchmark index. The top holdings of the fund include battery cell manufacturer CATL (7.6%), battery equipment company Wuxi Lead Intelligent (6.7%), Eve Energy (6.4%), which holds a 60% share of China’s lithium primary battery market, Shenzhen Inovance (6.2%), the leading company in China’s converter and servo market, Jiangxi Ganfeng Lithium (5.8%), and BYD (5.5%), the second-largest battery company in China. These are all electric vehicle manufacturing-related companies headquartered in China or Hong Kong.

Kim added, “China is leading the global electric vehicle battery market, and with a global battery market share of 32.5%, the related ETF returns are expected to continue to perform well.”

TIGER KRX Internet K-New Deal followed with a 21.76% return. This ETF is composed of internet-related stocks listed domestically under the BBIG theme, and the rise of platform companies such as Kakao and Naver drove the ETF’s increase. Since the beginning of this month, as foreign game licenses (game service permits in China) were partially released for some games in China, expectations for improved earnings were reflected, and the TIGER KRX Game K-New Deal index posted returns in the 9% range.

Among the eight actively managed ETFs simultaneously listed on May 25, the BBIG-themed ETFs showed the highest returns. The ‘TIGER Global BBIG Active ETF,’ which invests in BBIG stocks listed on Nasdaq, posted a 14.75% return, followed by the ‘TIMEFOLIO BBIG Active ETF’ with an 11.26% return. Other ETFs such as ‘TIGER Future Mobility Active’ (8.23%), ‘Navigator Eco-friendly Vehicle Value Chain Active’ (7.5%), and ‘KODEX K-Future Car Active’ (7%) also recorded single-digit returns.