Meritz Securities Launches Two ETNs Tracking Major Chinese Indices

[Asia Economy Reporter Ji Yeon-jin] Meritz Securities (CEO Choi Hee-moon) announced on the 29th that it has launched two exchange-traded notes (ETNs) tracking the 'CSI300 (Shanghai-Shenzhen 300) Index' and the 'STAR50 (Ke Chuang Ban 50) Index,' marking the first time such products have been introduced in the domestic market.

The products are ▲Meritz CSI 300 ETN ▲Meritz STAR 50 ETN, totaling two items.

The Meritz CSI 300 ETN tracks the CSI 300 NTR Index, which consists of 300 large-cap stocks listed on the Shanghai and Shenzhen Stock Exchanges. NTR stands for 'Net Total Return,' a method that reinvests after-tax dividends from constituent stocks back into the index.

The Meritz STAR 50 ETN tracks the STAR 50 Net Total Return Index, composed of 50 stocks selected based on liquidity and market capitalization from the Ke Chuang Ban (科創板, Ke Chuang Ban) market. Ke Chuang Ban is a market established to support capital raising for technology innovation companies in China and is often referred to as the Chinese Nasdaq. It was launched as an independent market in 2019 due to the deepening US-China conflict, which made it necessary for promising Chinese companies to list domestically. Recently, it has best reflected the trends of China's new growth industries. The Meritz STAR 50 ETN is the first domestic product tracking the STAR 50 Index and is expected to meet the diverse demands of investors wishing to invest in the Chinese mainland market.

All these products are currency-exposed ETNs, meaning that fluctuations in the yuan exchange rate affect returns, and all fees are 0%, allowing investment without tracking error.

Choi Seol-hwa, a researcher at Meritz Securities, explained, "The additional cut in China's reserve requirement ratio, which underperformed market expectations this year, is likely to be implemented in the second quarter of next year as inflationary pressures ease, which will be positive for a rebound in large-cap stocks." She added, "Representative companies in Ke Chuang Ban, known as the Chinese version of SoBuJang (materials, parts, and equipment), are expected to continue a structural upward trend due to strong policy support from the Chinese government, including efforts to promote semiconductor localization."