🇨🇳🇺🇸 China Funds Warn on US Premiums

Several Chinese mutual fund managers warned that US-focused products are trading well above net asset value despite new outbound investment quotas. At least six firms, including China Asset Management, Hua An Fund Management and China Universal Asset Management, issued warnings after some funds posted sharp market-price premiums; a S&P 500 ETF traded at a 5.8% premium and a Nasdaq biotech ETF at 4.3%.

The gap reflects persistent mainland demand for US equities as investors seek diversification amid low domestic interest rates and a prolonged property downturn. Beijing approved US$6.84 billion in fresh overseas investment quotas last month, but supply remains tight and many funds still cap daily purchases; retail access to foreign securities is restricted and largely routed through the QDII programme.

The products have risen at least 10% this year, outperforming the CSI 300, which is down 6.3%. Fund managers warned investors could face losses if premiums contract toward underlying asset values.

#China #US

@asianomics