Fund Focus | What investors want to know about the UOBAM FTSE China A50 Index ETF (SGX: JK8)

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    09 June 2025

     

    Since its launch in March 2025, the UOBAM FTSE China A50 Index ETF (SGX: JK8) has sparked much interest from investors, financial advisors and investment professionals. The ETF has prompted many questions about the US-China trade war, China’s economic transformation and the FTSE China A50 index.

    Here, the ETF’s Portfolio Manager, Iris Fan, answers a selection of probing and interesting questions put forward during our product roadshows.

     

    Iris Fan

    Iris Fan, Portfolio Manager, Asia Equities

     

    China outlook

     

    Q1: How deep rooted is China’s shift towards high value manufacturing and what is its impact on the overall economy?

    Iris: This shift is a long term structural trend aligned to China’s ambition to move up the global value chain and to increase its technological self-sufficiency. This is reflected in long term policies such as “Made in China 2025” which was launched in 2015 and the 14th Five-Year Plan (2021-25).

    As a result, exports of technology-intensive mechanical and electrical products and high-tech goods rose to RMB 19.1 trillion in 2021, from RMB 11.2 trillion in 2012, according to the Ministry of Industry and Information Technology1. In general, this has increased China’s overall economic productivity, improved manufacturing profits and made China’s supply chain more resilient.

    Q2: How have US-China trade tensions impacted China’s tech sectors, including big tech companies like Alibaba and Tencent?

    Iris: China’s tech sectors are affected on multiple fronts, but appear to be showing good resilience. Firstly, attempts to limit access to advanced chips and equipment have made technological progress more difficult for many Chinese tech companies including Alibaba and Tencent, which rely on Nvidia for high-end chips. Nevertheless, despite the disruption to semiconductor supply chains, Chinese tech companies have tackled the challenges by increasing domestic substitution and strengthening engineering innovation, recently culminating in Deepseek’s success story.

    Secondly, Chinese tech companies’ access to US markets have become more restricted, particularly in areas such as 5G on national security grounds. In response to this, Chinese firms in recent years have been exploring new markets and building relationships with BRI (Belt and Road Initiative) countries.

    Thirdly, the market is pricing in a higher geopolitical risk premium on Chinese tech companies listed only in the US. As the risk of ADR delisting continues, more companies are gravitating towards the Hong Kong Stock Exchange for listing requests. All in all, Chinese tech companies are carefully navigating the current situation and looking for workarounds.

    Q3: How serious a problem is China’s wealth gap and could this cause political instability going forward?

    Iris: To assess income or wealth inequality within a population, economists typically refer to a statistical measure called the Gini coefficient, which ranges from 0 - 1. A coefficient of above 0.4 is generally deemed to signify high inequality. According to the latest figures from the World Bank (2021 – 2022), the Gini coefficient for China is 0.36 while that for the US is 0.412.

    While this suggests that the situation in China is no worse than elsewhere, any worsening could indeed lead to more social discontent. However, the Chinese government seems to be highly sensitive to this issue and in 2021, made common prosperity a key policy priority. In the near to medium term, we believe the pre-emptive measures taken by the Chinese government should help to address some wealth inequality issues and prevent political instabilities.

     

    Market impact

     

    Q4: The Chinese government recently announced measures to boost the stock market. How likely are they to succeed?

    Iris: Policies designed to support the capital market, announced earlier this year, include increasing mutual fund and SOE insurer A-share equity allocation, allowing institutional participation in company share placements, and PBOC relending tool to support more company share buybacks and dividend payout.

    We estimate that these measures could attract as much as RMB 1.2 trillion of additional inflows into the Chinese A-share market in 20253. The sectors most likely to benefit are the high dividend players such as banks and SOEs. In fact, we think these measures have already helped to restore market confidence and have contributed to the Chinese stock market becoming one of the best performing markets in Asia so far this year.

    Q5: President Xi has called for more focus on tech growth rather than leisure indulgence. How will this affect consumption and leisure companies like Kweichow Moutai?

    Iris: This comment from President Xi echoes ongoing anti-corruption campaigns and the promotion of common prosperity. As such, we are already seeing some reduced demand for luxury goods and high-end dining.

    On the other hand, this trend provides opportunities for mid-tier consumers brands as consumers seek to reduce any lavish displays of wealth. In addition, trade tensions have increased expectations of a stimulus package focused on domestic consumption, in order to meet China’s GDP growth target of “around 5 percent”. This bodes well for consumption stocks.

    Q6: How will further rate cuts affect banking stocks and the FTSE China A50 Index, given its large financial sector component?

    Iris: As seen in recent easing cycles, interest rate cuts are often accompanied by deposit rate cuts, thereby minimising the impact on bank net interest margins. In addition, the Chinese regulators are keenly aware that many banks’ net interest margin is currently relatively low. To tackle this, they have recently made available RMB 500 billion to help these banks strengthen their balance sheets4.

    As a result, banking stocks have performed well on a year-to-date basis. This is positive for the FTSE China A50 index given its large exposure to the financial sector. From a valuation perspective, banking stocks are highly attractive, with forward earnings at 5x, and price to book ratios at around 0.5x5. Banks’ high dividend yields of around 5 percent also appeal to income investors.

     

    Index composition

     

    Q7: What is the selection criteria for the 50 stocks in the FTSE China A50 Index?

    Iris: The FTSE China A50 Index selects the 50 largest A-share companies listed on the Shanghai and Shenzhen stock exchanges, based on full market capitalisation. These companies are drawn from the broader FTSE China A All Cap Index, ensuring a representative cross-section of China’s domestic economy.

    To enhance investability, the index applies a free-float adjustment and liquidity screening, ensuring that only stocks with sufficient trading volume and accessibility are included. Since 2022, all constituents must also be eligible under the Northbound Stock Connect programme, which facilitates foreign investor access. The index is reviewed quarterly, with changes made to reflect shifts in market capitalisation and to maintain sector balance and tradability.

    Q8: The CSI Dividend Index comprises high dividend-paying China A-shares. How is this different from the FTSE China A50 index?

    Iris: Both indices have different objectives and selection methodologies. The FTSE China A50 Index is designed to represent the largest and most liquid A-share companies across a broad range of sectors. It aims to provide a snapshot of China’s economic core, including leading names in finance, consumer goods, industrials and technology.

    In contrast, the CSI Dividend Index specifically targets companies with consistently high dividend yields. Its selection is based on dividend payout history and yield performance, rather than size or liquidity. As a result, the CSI Dividend Index tends to have a higher concentration in sectors like finance, energy, industrials and materials, which are traditionally more dividend-focused.

     

    Iris Fan

    Iris joined UOB Asset Management in 2021. She is an investment analyst within the Asia Equities team covering China and Hong Kong macroeconomics and equity markets. Prior to joining the company, Iris worked in Investment Management at Credit Suisse. She started her career as an Economist at an investment research boutique, specialising in Asia.

     

    Iris received her Bachelor of Science (Honours) in Economics from University College London in the United Kingdom. She is a CFA charterholder as well as a certified Financial Risk Manager (FRM). Iris brings with her over 12 years of financial industry experience.

     

    1Source: Manufacturing sector continues to outperform, State Council of China, August 2022
    2Source: World Bank
    3Source: UOBAM, June 2025
    4People’s Bank of China, April 2025​
    5Source: UOBAM, June 2025

     

    If you are interested in investment opportunities related to the theme covered in this article, here is a UOB Asset Management Fund to consider:

    UOBAM FTSE China A50 Index ETF

    You may wish to seek advice from a financial adviser before making a commitment to invest in the above fund, and in the event that you choose not to do so, you should consider carefully whether the fund is suitable for you.

     

    This document is for general information only. It does not constitute an offer or solicitation to deal in units (“Units”) in the UOBAM FTSE China A50 Index ETF (“Fund”) or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it.

    The information contained in this document, including any data, projections and underlying assumptions, are based upon certain assumptions, management forecasts and analysis of information available and reflects prevailing conditions and UOB Asset Management Ltd’s (“UOBAM”) views as of the date of the document, all of which are subject to change at any time without notice. In preparing this document, UOBAM has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by UOBAM. While the information provided herein is believed to be reliable, UOBAM makes no representation or warranty whether express or implied, and accepts no responsibility or liability for its completeness or accuracy. Nothing in this document shall, under any circumstances constitute a continuing representation or give rise to any implication that there has not been or there will not be any change affecting the Fund. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or UOBAM and any past performance or prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of Units and the income from them, if any, may fall as well as rise, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate or affiliate (“UOB Group”) or distributors of the Fund. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund's prospectus. The UOB Group may have interests in the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund.

    Investors should note that the Fund is not like a conventional unit trust in that an investor cannot redeem his Units directly with UOBAM and can only do so through the participating dealers, either directly or through a stockbroker, if his redemption amount satisfies a prescribed minimum that will be comparatively larger than that required for redemptions of units in a conventional unit trust. The list of participating dealers can be found at www.uobam.com.sg. An investor may therefore only be able to realise the value of his Units by selling the Units on the Singapore Exchange Limited (“SGX”). Investors should also note that any listing and quotation of Units on the SGX does not guarantee a liquid market for the Units.

    An investment in unit trusts is subject to investment risks and foreign exchange risks, including the possible loss of the principal amount invested. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before deciding whether to subscribe for or purchase any Units. You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you.

    The UOBAM FTSE China A50 Index ETF has been developed solely by UOBAM. The UOBAM FTSE China A50 Index ETF is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies.

    All rights in the FTSE China A50 Index vest in the relevant LSE Group company which owns the FTSE China A50 Index. “FTSE®” is a trademark of the relevant LSE Group company and is used by any other LSE Group company under license.

    The FTSE China A50 Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the FTSE China A50 Index or (b) investment in or operation of the UOBAM FTSE China A50 Index ETF. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the UOBAM FTSE China A50 Index ETF or the suitability of the FTSE China A50 Index for the purpose to which it is being put by UOBAM.

    This advertisement has not been reviewed by the Monetary Authority of Singapore.

    UOB Asset Management Ltd Co. Reg. No. 198600120Z

     

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