Fund investors are confused! The wind has shifted dramatically, industry-themed ETFs saw net outflows of 26.2 billion yuan, the once-hot chemical sector is facing massive redemptions, and non-ferrous metals have erased all their year-to-date gains.

Why Did the Chemical ETF Sell-Off Triggered by Middle East Conflict?

By Yeping, Daily Economic News; Edited by Xiaorui Dong

This week, the Shanghai Composite Index fell below 4,000 points, while the ChiNext Index rose against the trend. Stock ETFs and cross-border ETFs in Shanghai and Shenzhen saw a total net outflow of 8.76 billion yuan.

In terms of industry themes, ETFs in healthcare and other sectors were favored by funds, while chemical, non-ferrous metals, and related ETFs experienced sell-offs.

Industry Theme ETFs Net Outflow of 26.2 Billion Yuan

This week, the total turnover in Shanghai and Shenzhen was 10.97 trillion yuan, with 4.76 trillion yuan in Shanghai and 6.21 trillion yuan in Shenzhen. As of the latest close, the Shanghai Composite closed at 3,957.05 points, down 3.38% for the week; the Shenzhen Component Index closed at 13,866.2 points, down 2.9%.

Wind data shows that this week, stock ETFs and cross-border ETFs in Shanghai and Shenzhen had a combined net outflow of 8.76 billion yuan, while broad-based index ETFs saw a net inflow of 9.078 billion yuan. Industry theme ETFs experienced a net outflow of 26.2 billion yuan.

Looking at detailed segments, the overall fund flows for major broad-based indices show that the CSI 300 had a net inflow of 6.558 billion yuan, while the CSI A500 experienced a net outflow of 6.202 billion yuan.

Regarding specific ETFs, the top 10 broad-based index ETFs by size had a total net inflow of 12.412 billion yuan this week, including the CSI 500 ETF (Southern) and CSI 300 ETF (Huatai-PineBridge), which each saw net inflows exceeding 4.3 billion yuan.

Performance of Major Index-Related ETFs This Week

Some analysts point out that the ongoing escalation of tensions in the Middle East has heightened concerns about prolonged conflict. Additionally, inflation fears triggered by energy shocks have reshaped global interest rate expectations, with markets no longer betting on a rate cut by the Federal Reserve this year. However, brokerage firms believe that this conflict will only temporarily affect market sentiment and the pace of market movements in A-shares, without changing the overall market direction.

Chemical, Non-Ferrous Metals, and Other ETFs Under Sell-Off

In industry theme ETFs, 28 funds saw net inflows of over 100 million yuan this week. Notably, healthcare ETFs, non-ferrous metals ETFs (Tianhong), and green power ETFs (Jia Shi) increased their fund shares by 2.374 billion, 865 million, and 461 million units respectively, with net inflows of 794 million, 786 million, and 624 million yuan.

On the outflow side, 61 industry theme ETFs experienced net outflows exceeding 100 million yuan this week. Among them, chemical ETFs, non-ferrous metals ETFs (Southern), and other non-ferrous metals ETFs saw reductions of 4.859 billion, 1.696 billion, and 795 million units respectively, with net outflows of 4.373 billion, 3.477 billion, and 1.577 billion yuan.

It is noteworthy that healthcare ETFs (512170) have recently continued to attract funds, with fund shares reaching new highs.

Healthcare ETF (512170) Fund Share Changes

Some analysts believe that the government work report has listed biomedicine as a new pillar industry, alongside integrated circuits, aerospace, and low-altitude economy, reaffirming policy support for the pharmaceutical sector and boosting industry confidence. Coupled with technological innovation and capital inflows, the Chinese biopharmaceutical industry is expected to maintain its momentum.

Meanwhile, recently popular chemical and non-ferrous metals ETFs experienced significant fund sell-offs this week.

Chemical ETF (159870) Fund Share Changes

Non-Ferrous Metals ETF (512400) Fund Share Changes and Trends

Some brokerages note that the Middle East conflict has driven oil prices sharply higher, raising inflation concerns. The Fed’s room for rate cuts is limited in the short term, which suppresses the financial attributes of non-ferrous metals.

It is also worth noting that the year-to-date returns of non-ferrous metals ETFs have been wiped out; as of Friday, the secondary market year-to-date return was -0.52%.

24 ETFs with Weekly Trading Volume Exceeding 10 Billion Yuan

This week, 24 ETFs had a trading volume exceeding 10 billion yuan, including the A500 ETF and Huatai-PineBridge A500 ETF, with weekly trading volumes surpassing 40 billion yuan.

It is noteworthy that the S&P Oil & Gas ETF (Jia Shi) hit a record high this week.

Some brokerages state that U.S.-Iran tensions could bring more uncertainty to energy supply and transportation. Under geopolitical influences, oil prices are expected to rise in the short term. If the U.S.-Iran situation expands to include the Strait of Hormuz and other Middle Eastern countries, oil prices could rise further.

Five ETFs Scheduled for Launch Next Week

While investors often focus on major holdings within funds, the holdings of actively managed funds tend to lag behind market movements. In contrast, ETF targets are very clear, and tracking newly listed ETFs can reveal recent hot stocks. The influx of capital into newly launched ETFs is also worth noting.

Currently, one ETF has announced its listing next week, tracking new energy vehicles.

Additionally, five ETFs are scheduled for issuance next week, tracking sectors such as household appliances, Hong Kong stocks (via Stock Connect), information technology, healthcare (via Stock Connect), and oil and natural gas.

Daily Economic News