A CHINESE exchange-traded fund (ETF) investing in 5G has drawn US$2 billion in cash in less than two weeks, the latest sign of speculative activity buoying the nation’s shares. The amount accounts for 80 percent of the funds the China AMC CSI 5G Communications Theme ETF has attracted since October’s launch, and makes the offering the most popular ETF in China in the past year. The fund tracks the CSI 5G Communication Index, which has jumped 25 percent this year. The inflows are drawing comparison to 2015, when speculators flocked to equities, inflating a bubble. Tech shares are once again favored targets of investors, despite the negative effects on the economy caused by COVID-19 outbreak. “ETFs and tech funds have gained an absurd amount of traction, and these flows fuel a self-fulfilling prophecy,” said Dong Baozhen, fund manager at Lingtongshengtai Asset Management in Beijing. “If funds keep pouring in at this pace, we will be left with mythological valuations and a bubble burst, just like 2015.” China’s stock market has erased losses spurred by the mass shutdown of the economy, with the broader CSI 300 Index surging 13 percent since its Feb. 3 low to approach a two-year high. Bets on fiscal stimulus and liquidity easing have powered the rally. The yuan too has shown ebullience, rising this week to its highest level since Jan. 22. (SD-Agencies) |