Source: Gelonghui
More and more pessimistic?
Today, China Securities Themed ETFs had the highest declines throughout the day. Harvest Fund's China General Internet ETF, E-Fangda Fund's China General Internet ETF, and China General Development Fund's China Capital Internet ETF all fell by more than 3%.
What is even rarer is that apart from the Guangfa Fund's China General Technology ETF, which had a slight premium of 0.42% today, the remaining four CCP themed ETFs all showed discount rates ranging from -1% - to -2.6% today. However, this Monday and Tuesday, almost all of the relevant ETFs were at a premium.
Looking further at today's rise and fall of the five CGF themed ETFs, apart from the GF China General Technology ETF, which is basically in line with the index performance it is tracking today, Harvest Fund's China General Internet ETF, E-Fangda Fund's China Internet ETF, and Guangfa Fund's CCF all declined by about 1 percentage point more than their tracking index today.
One point that needs to be pointed out is that the index tracked by the Guangfa Fund is SHS Technology Leader, that is, the China Securities Shanghai, Hong Kong, and Shenzhen Technology Leading Index. The constituent stocks are A-shares and Hong Kong stocks, while the constituent stocks of the other four China-themed ETFs are Chinese securities listed on Hong Kong stocks and US stocks.
Since the constituent stocks of the CCI-themed ETF include US stocks and Hong Kong stocks, the CCI Connect ETF is traded on the A-share market. The differences in the transaction time of the three markets mean that the price of a ChinaLink ETF is affected by many factors, including the calculation of the ETF's real-time on-market share reference net value (IOPV), which can completely accurately show the true value of the ETF.
Theoretically, there are three prices for on-market ETFs — net worth, fund share reference net worth, and transaction price.
Net worth means that the true value of the fund will be calculated based on a basket of shares corresponding to the ETF after the closing of each trading day, which is the so-called “net asset value.” The transaction price is the price accepted by the market that matches the supply and demand of the ETF market on the market.
However, transaction prices are prone to bubbles or undervaluation. In order to allow transactions in the secondary market to refer to the actual situation of ETFs, the exchange calculates and publishes the latest intraday transaction price of the latest corresponding securities in real time (updated every 15 seconds) based on the calculation method and portfolio list provided by the fund manager. This price is the “reference net fund share value” (IOPV).
However, for Chinese-themed ETFs that invest in US stocks and Hong Kong stocks, the IOPV calculation is also a bit troublesome. For example, when A-shares and Hong Kong stocks opened, the US stock market was already closed.
Theoretically, at the time of T trading, the US stock market on the night of T-1 had already closed. We can estimate the net fund value of T-1 based on T-1 constituent stocks (including gains in Hong Kong stocks and US stocks). This is the IOPV of China Interconnect.
However, given that most of the popular Chinese securities market rose overnight, the NASDAQ China Golden Dragon Index still rose 0.45%, and today's decline in China Securities ETFs was greater than the decline of the indices they are tracking. This may indicate that the discount on China Securities ETFs is due to pessimism in the market.
Because the market price of ETFs is determined by the supply and demand relationship in the secondary market. When market sentiment becomes pessimistic about certain sectors or assets, for example, if investors expect the index tracked by ETFs to fall in the future, investors may sell ETF shares at a price lower than the ETF's actual net worth, leading to a discount.
Once there are more sellers than buyers in the ETF market, the price may fall below the ETF's net value, creating a discount.
The Chinese-themed ETF was discounted today. On the one hand, the performance of Hong Kong stocks continued to be weak today. Large technology stocks, which are market trends, fell sharply under pressure. Meituan once plummeted 6% in the afternoon, and JD, Alibaba, and Tencent all fell. As a result, the Hang Seng Technology Index fell to 2.8% in the afternoon and eventually closed down 2.32%.
As a result, Chinese securities in the US stock market generally fell before the market. Among them, Ali, JD, Pinduoduo, and NetEase fell more than 2%.
According to the news, the General Administration of Market Regulation drafted the “Key Measures of Market Supervisory Authorities to Optimize the Business Environment (Draft for Comments)” to improve the coordination mechanism for normalized supervision and consultation on live e-commerce platforms. Standardize price charging behavior in the platform economy, explore the establishment of a negotiation mechanism between the platform and operators within the platform, and protect the right of operators within the platform to set their own pricing.
On the other hand, since the correction in Hong Kong stocks occurred last week, capital has begun to clearly sell off Chinese securities ETFs and ETFs with the theme of technology network stocks.
Last week, E-Fangda Fund had net outflows of 458 million yuan, 268 million yuan, and 260 million yuan respectively.
On May 28, ETF funds continued to firmly sell off Chinese securities themed ETFs. Among them, E-Fangda Fund's China Securities Internet ETF had a net outflow of 187 million yuan on the same day and a net outflow of 671 million yuan during the year. The Guangfa Fund had a net outflow of 70 million yuan on the same day and a net outflow of 1.22 billion yuan during the year.
Seen from this perspective, after a strong rebound in mid-late April, ETF funds seem very pessimistic about the China Securities Market. How long will it take for China Securities to recover this time?
Editor/jayden