Introduction to this report:

The China Semiconductor Chip Index will soon be included as a constituent stock of the Science and Technology Innovation Board. As the only ETF currently tracking this index, the Cathay Pacific CES semiconductor chip ETF has high allocation value.

Funds with high allocation values Summary:

In the technology stock market since '19, the performance of the chip sector is truly impressive. The chip sector represented by the China Semiconductor Chip Index (990001) has risen more than 300% (20181231-20201202). However, since the new high in July 2020, the chip sector has been stagnant and is still undergoing adjustments. At this time, the Shanghai Composite 50 and Shanghai and Shenzhen 300 indices, represented by traditional sectors, have reached new highs one after another. So is the chip sector still worth investing in? Our answer is yes.

Looking at the demand side, China's chip imports reached a record high in 2020. Recently, production capacity for 8-inch wafer manufacturing was scarce, and the chip industry chain was out of stock and price increases gradually spread; from the supply side, the increase in China's chip self-sufficiency rate (30%-70%), compounded by other countries' technology blockades, spawned a booming industry.

Since the first batch of companies listed on the Science and Technology Innovation Board, companies related to the chip industry have benefited the most. Since 2020, the yield of the Sci-Tech Innovation 50 Index has reached 41.08%, while the Shanghai and Shenzhen 300 Index was only 23.45% during the same period (as of 20201203).

The China Semiconductor Chip Index pioneered and was included as a component of the Science and Technology Innovation Board for the first time, accounting for about 8% of the index's market value. Compared to the chip index, which is not included in the science and technology innovation board stocks, it can better characterize the development of the chip industry. Furthermore, the constituent stocks included this time are all 50 science and innovation stocks. Benefiting from the influence of incremental passive capital, the subsequent index performance was also different. As the only ETF that currently tracks this index, the Cathay Pacific CES semiconductor chip ETF has high allocation value.

Cathay Pacific Fund has very rich management experience in ETF management in the industry. Its comprehensive management scale ranked first in the market, reaching 76.3 billion yuan (passive industry ETF index funds, as of 20201130). Its industry ETF products cover multiple industry sectors and form a rich product matrix, making it easy for investors to freely choose.