The first batch of 10 public funds reported the CSI A50 ETF product
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At the beginning of the new year, another major broad-based ETF product was reported. According to information disclosed on the China Securities Regulatory Commission website, 10 fund companies collectively reported ETF products tracking the CSI A50 Index. Industry insiders said that with the approval of these index products in the future, individual and institutional investors will have new and convenient tools to share in China’s economic growth. The release of the A50 index is conducive to optimizing the resource allocation function of the stock market and is also conducive to boosting market confidence. At the same time, the richness of related ETF products will also help investors tap new growth points of China’s economy and become another important target for domestic and foreign funds to allocate core assets of A shares.
Specifically, the A50 ETFs declared by five funds, E Fund, Huatai-PineBridge, Harvest, ICBC Credit Suisse, and Morgan, will be listed on the Shanghai Stock Exchange; the products declared by five funds, Wells Fargo, Huabao, Ping An, Dacheng, and Yinhua, will be listed on the Shenzhen Stock Exchange.
In recent years, as my country’s economy has shifted to a stage of high-quality development, the driving force of economic development has shifted from factors and investment-driven to innovation-driven. The number and weight of new economic industries in the capital market have increased significantly, and a number of high-quality and large-market leading new economy listed companies have emerged. In order to more comprehensively reflect the long-term operating trend of representative listed company securities in various industries, CSI Index Corporation launched the CSI A50 Index on January 2, 2024.
Judging from the compilation plan, the CSI A50 Index selects the 50 securities with the largest market capitalization from the securities of leading listed companies in various industries as index samples to reflect the overall performance of the securities of the most representative leading listed companies in each industry. In terms of industry distribution, those with index weights exceeding 10% include industry, consumer discretionary, medicine and health, etc. According to China Securities Index Co., Ltd., the top ten heavyweight stocks in the CSI A50 Index are Kweichow Moutai, Ping An, CATL, China Merchants Bank, Midea Group, Yangtze Electric Power, Zijin Mining, Hengrui Pharmaceuticals, CITIC Securities, and BYD. The proportions are 9.88%, 6.62%, 6.57%, 5.25%, 4.10%, 3.49%, 3.13%, 3.08%, 3.03%, and 2.74% respectively.
Judging from the historical performance of the index, as of December 29, 2023, the annualized returns in the last one year, three years, and five years were -12.42%, -13.24%, and 4.60% respectively. The total market value of the entire index constituent stocks reached 12.17 trillion yuan, and the index market value was 6.55 trillion yuan. From a fundamental perspective, the rolling price-to-earnings ratio is 14.96 times, the price-to-book ratio is 2.02 times, and the dividend rate is 2.72%.
Focusing on the investment value of the CSI A50 ETF, Dacheng Fund stated that the CSI A50 Index is expected to become the Nifty 50 Index that best represents the Chinese stock market in the future. The market capacity and development space are both worth looking forward to. Morgan Asset Management also believes that the index is based on the new stage of China’s economic development, introduces new concepts of sustainable development, and is compiled from a new perspective of industry balance, and is expected to become a new representative of the A-share broad-based index.
Dacheng Fund stated that the CSI A50 Index has four major characteristics. First, the industry distribution is balanced (the compilation rules require that the number of selected companies in each CSI secondary industry is no less than 1, covering 30 CSI secondary industries). Second, the industry leading effect is obvious (the securities to be selected meet the requirements of ranking first in the daily average free float market value of the CSI three-level industries in the past year, covering 50 CSI three-level industries). The third is to have ESG sustainable investment requirements with Chinese characteristics and in line with the characteristics of my country’s high-quality economic development stage (listed companies with CSI ESG evaluation results of C and below are excluded). The fourth is to select high-quality large market capitalization stocks (the securities to be selected meet the top 300 average daily total market capitalization in the sample space over the past year).
It is worth noting that the index compilation method not only focuses on industry balance, but also introduces the concept of ESG sustainable investment. The overall fundamental performance of the index samples is relatively good, and it has a good demonstration effect in the capital market in terms of ESG practices. Nearly half of the companies’ return on net assets in fiscal year 2022 ranked in the top 10% of the same industry, and more than 80% of the samples had ESG ratings of A and above.
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