The SinoPac China Technology 50 ETF (00887), which is linked to the Chinese stock market, has experienced unusual stock price movements recently, with a premium of 223% at one point. It was described as a "perfect little storm" by Chen Yanliang, deputy chairman of the Financial Supervisory Commission, and a special investigation has been set up.
Yongfeng China Top 50 Science and Technology 00887
SinoPac China Technology 50 (stock code 00887) is an ETF issued by SinoPac in March 2021. It aims to track the performance of the CSI Technology 50 Index. Its constituent stocks cover A-share listed technology companies in mainland China. By tracking the index components, stocks can fully participate in investment opportunities in the mainland's technology industry. The scale as of the end of September was NT$652 million.
Taiwan stockholders suddenly bought 00887, with a premium of 223% at one point
The Chinese government launched a strong rescue plan before the National Day holiday, causing investors to rush to ride on China's artificial bull market train. At that time, the Nasdaq China Golden Dragon Index (HXC), which represented Chinese concept stocks, rose by 23.94% in a week, and all risk assets welcomed the Have a great week ahead.
However, since the Chinese market was not open from 10/1 to 10/7, Taiwanese investors could only seek alternatives. However, Yongfeng China Technology 50 00887 showed a substantial premium despite the large inflow of funds but lack of liquidity. , the premium was as high as 223% on 10/7. At that time, the net value of the ETF was still at 12 yuan, but investors had to spend 38.83 yuan to buy it. It can be said that if you buy it now, you will lose money.
The premium was too large and was subject to special inspection by the Financial Supervisory Commission
According to the Central News Agency, 00887 has experienced a large premium in recent days. Since the 11th, the OTC buying center has entered into disposal stocks, resulting in a multi-million level defaulted delivery. The Financial Supervisory Commission also asked Yongfeng Investment to "drink coffee" on the 14th.
Chen Yanliang, deputy chairman of the Financial Supervisory Commission, said when questioned by legislator Guo Guowen that the scale of 00887 was not large. It was a perfect little storm. The main reason was that China introduced market incentive measures during the long holiday. Although China itself was closed, Taiwan stocks were closed during the period. Trading continues and investors pursue purchases. Chen Yanliang said that the Financial Supervisory Commission has been conducting a special inspection and asked SinoPac to provide an explanation, and there will be a monitoring mechanism. SinoPac also promised to eliminate the large premium of ETFs as soon as possible.
A replica of Grayscale’s GBTC?
A major feature of ETFs is that they allow Authorized Participants (APs) to arbitrage between the net asset value (NAV) of their holdings and EFTs to maintain consistency between net asset value and market capitalization.
AP can exchange ETF constituent stocks directly with asset companies for ETF shares in the primary market, allowing EFT to be closer to the spot market price through arbitrage. Before the release of the familiar Bitcoin spot ETF, Grayscale’s GBTC suffered from serious discounts and premiums due to the lack of this mechanism.
00887 Due to its small scale and the National Day holiday, it was not possible to buy and sell in the Chinese stock market immediately, resulting in large fluctuations in market prices. It ultimately formed a "perfect little storm", but for the small investors who bought at that time, it was the highest price. point. This also reminds us that when investing, we cannot just follow the trend. We need to do research and risk control to avoid running headlong into the storm.
This article The grayscale of China’s artificial bull market, why Yongfeng 00887 was inspected by the Financial Supervisory Commission first appeared on Lian News ABMedia.
