Shinhan Asset Management will launch a China stock exchange-traded fund (ETF) for the first time in three years. With many China stock ETFs focused on technology names such as artificial intelligence (AI) and robotics or on traditional consumer staples, it highlighted that it reflects the "consumption trends of Millennials and Gen Z."
According to the financial investment industry on the 6th, Shinhan Asset Management plans to list the ETF "SOL China Consumption Trend" as early as on the 25th of this month. It has completed the Korea Exchange (KRX)'s final review.
SOL China Consumption Trend invests in 10 consumer stocks drawing attention from China's Millennials and Gen Z. It has the largest weighting in Pop Mart International Group (Pop Mart), a Chinese art toy company famous for the "Labubu" character.
In addition, Lao Pu Gold (老铺黄金), a new Chinese jewelry company, and Mixue, a milk tea beverage maker, are also expected to be included in the ETF's constituents. Camping-related stocks reflecting the recent outdoor boom are also said to be included. The detailed weightings by stock have not yet been finalized.
SOL China Consumption Trend is a China-related ETF that Shinhan Asset Management is rolling out about 3 years and 10 months after "SOL China Nurturing Industries Active (Synthetic)," launched in 2022. Given that most China stock ETFs recently launched by domestic managers focus on technology stocks such as AI and robotics, it appears to be differentiating itself with consumer names.
Park Su-min, head of product strategy at Shinhan Asset Management, said, "We judged that the AI boom is obscuring another investment opportunity in China's domestic consumption sector," adding, "We plan to introduce a product that can track the growth of the consumer market in line with the Chinese government's domestic demand stimulus policies." Park also said, "Unlike existing China consumer-theme ETFs that focus on traditional industries, this product reflects an analysis of the consumption patterns and trends of China's Millennials and Gen Z."
However, the sluggish share price of Pop Mart, a representative holding, is cited as a burden. On the day, Pop Mart closed at 217.6 Hong Kong dollars, down 36% from the peak of 339.8 Hong Kong dollars in Aug.
Park Ju-young, an analyst at Kiwoom Securities, said, "Pop Mart is dependent on a single character called Labubu," and noted, "Questions about the sustainability of its popularity are weighing on the share price."