Rate Of ReturnBreaking - New tool for cross-border investment, one-click investment in Hong Kong, US, and A-shares
Recently, I came across a financial news that caught my attention:
On September 26, the "Rayliant-ChinaAMC Transformative China Tech ETF (CNQQ)" was successfully listed on NASDAQ.
Simply put, a new ETF called CNQQ was recently listed on NASDAQ, which primarily invests in a basket of Chinese tech assets. There are many ETFs investing in Chinese assets, so why did CNQQ catch my attention? The main reason is that this ETF solves the challenges of cross-border investment.
For RMB investments in overseas Chinese tech assets or U.S. tech assets, the channels are relatively smooth. For example, investing in Hong Kong-listed assets can be done through Stock Connect. If you want to invest in U.S. tech assets or lack sufficient capital to access Stock Connect, you can choose Hang Seng Tech ETF or NASDAQ ETF via an A-share account.
Overall, RMB investments in overseas tech assets are relatively smooth. However, the reverse—using USD assets to directly invest in A-share tech assets—seems more challenging. After all, the Northbound Connect (for overseas investors to invest in A-shares) was banned in regulatory actions at the end of 2022, and mainland identities can no longer invest in A-shares through Northbound Connect.
In previous years, the A-share market was in a downturn, and overseas demand for A-share investments wasn’t particularly strong. However, this year, the A-share market has seen a significant surge in activity, especially with the sharp rise in A-share tech assets, driving increasing demand from overseas investors to invest in A-share tech stocks.
The CNQQ ETF mentioned in the news is designed to meet the demand of overseas investors for one-click access to both overseas and A-share tech assets.
It is reported that this ETF tracks the "Solactive ChinaAMC Transformative China Tech Index," aiming to provide investors with attractive opportunities in China's tech and innovation sectors.
Currently, CNQQ covers nearly 100 Chinese companies listed in mainland China and Hong Kong, spanning five major sectors: automotive & transportation, commercial & consumer services technology, electronics & electrical products, healthcare technology, industrial & manufacturing technology, and digital software technology.
CNQQ can be seen as China's version of the Nasdaq-100 ETF. Through CNQQ, investors can gain exposure to China's leading tech companies listed in Hong Kong and mainland China—companies that are often referred to as the Chinese counterparts of Google, Meta, Tesla, Apple, and OpenAI. Additionally, by employing factor-based stock selection and non-traditional market-cap weighting methods, CNQQ has created a higher-quality growth stock portfolio, offering investors a forward-looking, comprehensive, and long-term effective investment solution.
Looking at the specific holdings:
The top 10 holdings account for 46.63%, including 6 Hong Kong-listed stocks and 4 A-share stocks. These include Hong Kong-listed internet and tech stocks like Alibaba, Tencent, Xiaomi, Meituan, NetEase, and Baidu, as well as A-share tech stocks like CATL, InnoLight, Cambricon, and NAURA.
Further down the list, Hong Kong-listed stocks also include JD.com, Bilibili, Li Auto, XPeng, Pop Mart, and SenseTime, while A-share stocks include Luxshare Precision, Foxconn Industrial Internet, Montage Technology, AMEC, Sungrow Power, and GigaDevice.
From a broader perspective, CNQQ’s core investment focus is clear: it essentially includes China’s most valuable overseas internet tech companies and the most cutting-edge A-share tech firms. CNQQ provides investors with a convenient way to access China’s most disruptive tech companies, including leading internet and e-commerce platforms, as well as innovative firms in sectors like automotive, robotics, pharmaceuticals, and new energy, thereby capturing opportunities from China’s future economic growth.
Beyond one-click access to Hong Kong and A-share tech assets, another advantage of CNQQ is its listing on NASDAQ, with trading hours synchronized with U.S. markets, supporting pre-market, after-hours, and overnight trading—effectively 24-hour trading from Monday to Friday. The extended trading hours allow for greater flexibility in responding to macro and micro-level market-moving events. For overseas investors who lack the time to research individual stocks but want to capitalize on the growth of China’s core assets, CNQQ is an excellent choice.
Overall, at the current juncture, investing in Chinese tech assets via ETFs is a favorable approach and timing. Wall Street’s enthusiasm for Chinese tech stocks has notably increased. Multiple U.S.-listed overseas China stock ETFs have seen substantial growth in assets under management. According to Futu data, as of October 2, the KraneShares China Overseas Internet ETF’s assets surpassed the $10 billion mark, up nearly 60% from $6.374 billion at the end of the first half of the year.
The launch of an ETF focused on Chinese tech stocks at this time coincides with what the market is calling the "DeepSeek Moment." This moment has made global investors realize that China’s tech industry has moved beyond its traditional role as a hardware manufacturing hub, now competing with—and in some areas even surpassing—global leaders in multiple fields. This shift in perception has prompted international investors to reassess the positioning of Chinese tech companies.$Rayliant-ChinaAMC Trnsfrmtv Chn Tech ETF(CNQQ.US) $TENCENT(00700.HK) $BABA-W(09988.HK)
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