Korea Investment Trust Management Launches KINDEX China STAR Market STAR50 ETF

[Asia Economy Reporter Junho Hwang] Korea Investment Trust Management has listed the exchange-traded fund (ETF) ‘KINDEX China STAR Market STAR50 ETF,’ which invests in Chinese science and technology innovation companies, on the Korea Exchange on the 13th.

The STAR Market (officially called the Science and Technology Innovation Board) is a market newly established by the Shanghai Stock Exchange in June 2019 to facilitate capital raising for emerging technology innovation companies by the Chinese government. It has the highest proportion of future industry innovation companies such as advanced information technology (IT), new materials, electric vehicles, and biotechnology in the Chinese financial market.

This product is a passive ETF that tracks the STAR 50 Index, the representative index of the STAR Market. The STAR 50 Index consists of the top 50 stocks with high liquidity and large market capitalization among companies listed on the STAR Market. Representative companies include SMIC, China’s largest semiconductor foundry; TRINA SOLAR, a solar power module and energy solutions company; KINGSOFT, an office software development and sales company; MONTAGE TECHNOLOGY, an IT solutions company related to cloud computing and data centers; and TRANSSION, a manufacturer specializing in affordable smartphones.

This product is the only physical stock-type product among the STAR Market ETFs simultaneously listed on the domestic market on the same day, directly incorporating the stocks that constitute the underlying index. The physical type allows investors to enjoy dividends generated from stocks in the portfolio and does not incur swap costs.

This product is currency-exposed, meaning that the daily performance reflects both the performance of the underlying index and fluctuations in the Chinese yuan exchange rate against the Korean won. The total annual fee is 0.5%.

Jung Sung-in, head of the ETF Strategy Department at Korea Investment Trust Management, said, "The STAR Market is the market that will benefit the most from the Chinese government’s mid- to long-term national project policy of ‘scientific and technological self-reliance and self-strengthening.’ Investors who want to invest in Chinese emerging technology stocks should pay attention to the STAR Market."