Second supply chain ETF debuts in China despite Omicron lockdowns
The supply-chain thematic ETFs track the CSI Modern Logistics Index, which includes the country’s largest vendors, warehouses, transportation companies, distribution centres and online retailers © AFP via Getty Images We’ll send you a myFT Daily Digest email rounding up the latest Exchange traded funds news every morning.
Interested in ETFs?Visit our ETF Hub for investor news and education, market updates and analysis and easy-to-use tools to help you select the right ETFs.
China’s second logistics-focused exchange traded fund debuted this week even as the country’s battle to curb the spread of the Omicron variant with strict lockdowns continues to stretch global supply chains.
Yinhua Fund Management’s CSI Modern Logistics ETF was listed on the Shanghai Stock Exchange on January 17 after raising Rmb269m ($42.4m) in initial assets, public records show.
The listing comes seven months after the country’s first such thematic product, Fullgoal Fund Management’s CSI Modern Logistics ETF, was launched in June last year with marginally bigger first-round subscriptions of Rmb281m.
As of January 10, the Yinhua ETF held only 27.2 per cent of its assets in Chinese stocks as it was still building its portfolio, according to its listing announcement.
Both supply chain thematic ETFs track the CSI Modern Logistics Index, which has 46 constituents covering the country’s largest vendors, warehouses, transportation companies, distribution centres and online retailers.
The underlying benchmark closed at 1,352.5 yesterday, up 17.5 per cent since the beginning of last year and 26.9 per cent since January 2020, as the pandemic spurred demand for online shopping with the central government implementing frequent regional lockdowns to maintain its zero-Covid target.
The Fullgoal strategy has returned 14.9 per cent since inception, Wind data show, with its benchmark outperforming most broad-based indices in the meantime. Nonetheless, the ETF now runs only Rmb43m in assets, an 85 per cent plunge from the new subscriptions it first garnered.
This article was previously published by Ignites Asia, a title owned by the FT Group.
While the steep fall in fund assets is common as Chinese investors often rush to buy new funds only to offload to chase newer ones, it could also highlight lingering weaknesses in domestic consumption, which have arisen in part due to Chinese policymakers’ hardline measures to eliminate all coronavirus cases.
A lockdown in the central city of Xi’an is now in its third week, with about 13m people still cooped up in their homes. Mandatory testing has been imposed in Tianjin, a populous port city near Beijing, as well as in several manufacturing hubs in the central Henan and southern Guangdong provinces.
On January 15, Beijing reported its first locally transmitted case of Omicron, just weeks ahead of the Chinese Lunar New Year holiday and the Winter Olympics.
The latest restrictions have exacerbated supply chain chaos in recent months. The container port at Ningbo in east China, the world’s third-largest, has suspended some trucking services after a local outbreak, aggravating ship congestion.
Meanwhile, carmakers Volkswagen and Toyota both closed their Tianjin plants last week. In Xi’an, Samsung has struggled with staff shortages because of the lockdown.
In a sign of nagging anxiety among Chinese consumers, retail sales saw a year-on-year increase of just 1.7 per cent in December, the slowest rate in 14 months.
But even as businesses operating in China grapple with raw materials shortages and shipping bottlenecks, the growth in the local logistics sector, well buttressed by the largest digital shopper population in the world, is predicted to continue on the upward trend it has tracked over the past six years.
Between January and November last year, Chinese courier services delivered almost 98.1bn parcels within the country, according to the Ministry of Transport, up by 32.3 per cent from a year ago.
Chinese suppliers’ revenues increased almost a third between 2016 and 2020 to Rmb10.5tn, data from China Commercial Industry Research Institute show. The figure for 2021 is expected to reach Rmb11.3tn, a slight dip in expansion but still above pre-pandemic levels.
*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.
Click here to visit the ETF Hub
{"focus":["29e67a92-a3b8-410c-9139-15abe9b47e12","59d55e5c-cb83-49dc-bacb-26dcc51566d0","8b82f4f1-6fdf-4fe1-91db-99cac1802016","df274e2a-c554-4cb6-ab93-deeff9928e91","a579350c-61ce-4c00-97ca-ddaa2e0cacf6","aefe85b0-81f1-4ea8-b6b4-1e1d02850476","1b0e0dc0-21f2-4216-8c14-1204b0ae26d8","67fdde56-9e5e-405c-b26f-e58a6ad11c33","82645c31-4426-4ef5-99c9-9df6e0940c00","c91b1fad-1097-468b-be82-9a8ff717d54c","ec4ffdac-4f55-4b7a-b529-7d1e3e9f150c","fab33c6e-17a3-4c4b-b457-1c8e7aceff6d"],"brandConcept":"aefe85b0-81f1-4ea8-b6b4-1e1d02850476","authorConcepts":["2cb33502-070c-4946-9bf0-3e84a1d80879"],"displayConcept":"df274e2a-c554-4cb6-ab93-deeff9928e91"}Get alerts on Exchange traded funds when a new story is published
Get alertsCopyright The Financial Times Limited 2022. All rights reserved.Reuse this content (opens in new window) CommentsJump to comments sectionPromoted Content- Global Economy Add to myFT
- Supply chains Add to myFT
- Exchange traded funds Add to myFT
- China Add to myFT
- ETF Hub Add to myFT
Owl Media Group takes pride in providing social-first platforms which equally benefit and facilitate engagement between businesses and consumers and creating much-needed balance to make conducting business, easier, safer, faster and better. The vision behind every platform in the Owl Media suite is to make lives better and foster a healthy environment in which parties can conduct business efficiently. Facilitating free and fair business relationships is crucial for any thriving economy and Owl Media bridges the gap and open doors for transparent and successful transacting. No advertising funds influence the functionality of our media platforms because we value authenticity and never compromise on quality no matter how lucrative the offers from advertisers may seem.
Originally posted on: https://www.ft.com/content/a1d706c6-e6c9-4b60-89cd-ebf1f0c24a1d