Global X launches China Tech ETF on ASX for local investors

Global X has launched the Global X China Tech ETF (ASX: DRGN), offering Australian investors targeted exposure to Chinese technology companies listed in China and Hong Kong.

The new ETF is designed to track the Global X Tech 20 Index and provides a portfolio consisting of 20 stocks deemed to be central to China's technology sector, including well-known entities such as Tencent, BYD, and Alibaba.

Billy Leung, Senior Investment Strategist at Global X, commented on the establishment of the new fund, highlighting the depth and breadth of China's technology industry.

"China's technology landscape has been built over decades of industrial development, infrastructure expansion, and digital scaling – resulting in a robust landscape which spans everything from hardware and platforms to advanced manufacturing," said Leung.

Leung emphasised the importance of Chinese technology firms within the global and national context, stating, "Chinese tech companies cannot be underestimated. They aren't speculative, rather they will be responsible for China's shift toward self-sufficiency and are critical to the global technology ecosystem."

The ETF aims to provide investors with direct access to industries that have typically been underrepresented in existing China-focused ETFs, including artificial intelligence (AI), automation, and semiconductors. The fund will not invest in state-owned entities or financial sector firms, focusing on firms that are independently driving technological advancements in China.

Leung described the foundation underpinning China's technology sector, adding, "China's technology sector is built on decades of industrial expansion and infrastructure investment."

"This deep foundation has given rise to a vast innovation ecosystem from manufacturing to automation and AI. With the digital economy projected to exceed 55% of China's GDP by 2030, we are only beginning to see the transformational impact on productivity across all sectors and help secure the country's long-term competitiveness."

The management fee for the passively managed DRGN is set at 0.45% per annum.

Providing further distinction from similar offerings in the market, Leung said, "DRGN is different from its peers as it avoids state owned entities (SOEs) and financials, therefore it could be an attractive addition to both direct and institutional investors seeking direct, high-conviction allocation to China's key growth industries without dilution from other markets. It offers exposure to industries such as AI, automation, and semiconductors that are historically underrepresented in existing China-focused ETFs."

Currently, China-focused ETFs listed in Australia collectively manage approximately AUD $470 million, while broader Asia-focused ETFs with China exposure account for about AUD $1.9 billion.

Leung cited continued demand for China technology investment options: "There is significant anticipation for this ETF to hit the local market and we are thrilled to be delivering such a strategic solution to our clients."

"Given, this demand and success of previous tech-focused ETF launches such as GXAI in 2024, Global X expects DRGN to accumulate around AUD $40 million over its first year of trade," he said.

"This launch is particularly timely as China's market has been unloved over the last 24 months due to sentiment-driven concerns around regulation, geopolitics, and macro growth."

"But beneath the surface, earnings visibility is improving, operational momentum is returning, and strategic sectors like AI, EVs, and semiconductors are beginning to scale making this an inflection point for investors focused on fundamentals."

With the addition of DRGN, Global X now offers a total of 45 ETFs in Australia across themes including growth, commodities, income, international access, core, and digital assets.