Investing in China’s technological rise

Access technology-driven Chinese companies with UBS ETF

Exchange Traded Fund (ETF) 16 Apr 2021

The Chinese government has targeted high-technology industries as a strategic growth priority. The investment to strengthen national players has started to pay off and technological innovation is one of the main growth drivers for the country. China´s digital economy now accounts for about 30% of GDP - having more than doubled from 2008. Our rules-based and transparent solution aims to capture these opportunities by selecting the 100 largest technology-driven Chinese companies.

Step-by-step: Solactive China Technology index portfolio construction

In addition to selecting companies from the traditional technology sector and health technology sub-sector, the Solactive China Technology Index also includes companies which derive the majority of their revenues from various innovative, technology-related business activities, including genomics, robotics and automation, cybersecurity, digital entertainment, cloud computing, future cars, blockchain and social media.

Figure: Index methodology overview

Source: Solactive, UBS Asset Management.

The table displays five columns that outline the construction of the Index methodology. They are structured as Sectors & Economies, Exchanges included, Inclusion weights, Top 100 largest stocks and Diversification.

In order to capture most of the available opportunities, the index incorporates onshore, offshore as well as foreign listings in its eligible universe. To keep the index replicable, only A-shares trading through Stock Connect are eligible and are included at 20% of their free-float market capitalization to reflect foreign ownership restrictions. Once the largest 100 stocks are selected, a 10% security capping is applied to individual components to diversify issuer risks.