In the past five years, the scale of ETFs in the whole market has increased by nearly 1.5 trillion yuan, an increase of 293%.
2023 is a big year for ETFs, although A-shares have fallen into adjustment, and the Shanghai Composite Index has repeatedly pulled around 3,000 points, but the mainland ETF market has entered the 2 trillion mark for the first time, a record high, especially the share of stock ETFs has risen sharply, and 100 billion equity ETFs have been born.
Wind data shows that as of December 28 (the same below), there were 896 ETFs in the whole market, with an overall share of 2.02 trillion shares and a scale of 1.98 trillion yuan, an increase of 40% and 22% respectively from the beginning of the year.
- Among them, the share and scale of equity ETFs took the lead, with a total share of more than 1.36 trillion shares, an increase of 52% from the beginning of the year, and a scale of nearly 1.39 trillion yuan.
- followed by cross-border ETFs, with a share of 165.5 billion shares from the beginning of the year to 431.7 billion shares, an increase of 62%.
- On the contrary, the share of currency ETFs fell the most, falling by 55.9 billion to 216.9 billion during the year, a decrease of more than 20%.
This article divides ETFs into multiple sub-types and summarizes the performance of different types of ETFs in 2023:
(1) Large-scale index ETFs were spared from all kinds of ink, and 100 billion-level ETFs were born
(2) Game ETFs take the lead, and photovoltaic ETFs rise sharply at the end of the year to get rid of the "crane tail"
(3) Gold ETFs rose by more than 15% during the year, but many gold ETFs were "urgent"
(4) The difference between the first and last performance of cross-border ETFs is 84%, but funds are "buying more and more"
(5) Bond ETFs are "stable and happy", and the overall trading activity will increase in 2023
1. On the 28th, the A-share counteroffensive! The scale index ETF survived the "total annihilation", and the 100-billion-level ETF was born
In the past year, A-shares have risen first and then declined, and have fallen into a 3,000-point tug-of-war many times. While large-cap indices such as the Shanghai Composite Index and the CSI 300 have underperformed, small-cap indices have significantly been more resilient.
- At the beginning of the year, the overall performance of A-shares was strong, under the optimistic market expectations, the CSI 300 walked out of the year's high of 4268.15 points on January 30, and the small and medium-cap indices CSI 1000 and CSI 2000 continued to rise out of the year's high in mid-February.
- In March, driven by the concept of ChatGPT, from applications to hardware-related sectors rose sharply. Subsequently, from mid-to-late March to early May, during the period of the first weight stocks of the Chinese word broke out across the board, driving the market index to open higher and higher, the Shanghai Composite Index once stood at 3400 points, and the CSI 300 benefited from the take-off of the concept of the special valuation during the slight recovery, but as the economic recovery was less than expected, the CSI 300 weakened with the market all the way. However, the small- and mid-cap stock index did not benefit much, but rose sharply after the market "turned off".
- On July 24, the tone of the Politburo meeting of the Central Committee brought a glimmer of light to A-shares, on July 25, the three major indexes, CSI 300, CSI 1000, CSI 2000 and other major indices jumped out of the air, but this wave of market did not last too long, especially after the central bank released the July financial statistics report and superimposed on the northbound funds in August to continue to sell, CSI 300 shock weakened, although after the release of the news of the halving of stamp duty on securities transactions, the market briefly warmed up, but the overall downside.
- On October 23, the three major indexes once collectively fell by more than 2%, the CSI 300 intraday 3450.65 points hit a new low since 2019, and the small and mid-cap stock index also hit a new low on this day. However, just like the old saying is not broken, after increasing the holdings of large state-owned banks, Central Huijin shot again on the same day, and from the perspective of the A-share market, the three major indexes rebounded significantly at the end of the market. After Central Huijin increased its holdings, the three major indexes and the CSI 300 rose for many consecutive trading days, and the small and medium-sized market equal breadth index also went all the way up.
- Entering December, the Shanghai Composite Index fell into a tug-of-war of 3,000 points. The three major indexes and the CSI 300 have reached new lows in the recent refresh stage, and small-cap indices such as the CSI 1000 and CSI 2000 have also fallen one after another.
- On the afternoon of December 27, A-shares ushered in strong buying power, and on the 28th, A-shares ushered in a long-lost comprehensive rebound, and northbound funds returned sharply.
From the perspective of returns, thanks to the A-share counteroffensive on December 28, the income of the scale index ETF survived the "total annihilation".
Judging from the rise and fall of the scale index ETF during the year, as of December 28, compared with the CSI 300, which fell by nearly 12% and the Science and Technology Innovation 50, which fell by more than 11%, the small and medium-cap stock index was relatively resistant. For example, the CNI 2000 ETF (159628) rose 1.28%, the 1000 ETF Enhanced (159680) rose 1.25%, and the Zhongchuang 400 ETF rose 1.13%. In addition, the CSI 2000 has risen nearly 4% this year, and most of the ETFs tracking the CSI 2000 are new ETFs in 2023, which are among the top gainers.
Although the overall A-share market has fallen into adjustment this year, and the CSI 300, Kechuang 50, and the three major indices have fallen out of the stage of new lows in the near future, the share of the scale index ETF has increased significantly, and on the whole, the scale index ETF has increased from 330.2 billion yuan at the beginning of the year to 559.5 billion yuan, an increase of nearly 70%, which is the most obvious share growth among all types of ETFs.
It is worth mentioning that when it comes to 100 billion stock ETFs, you will definitely think of the CSI 300 ETF (510300), the latest scale of more than 120 billion yuan, tracking the science and technology 50 ETF is favored by funds, and the share has increased significantly, of which the share of the science and technology 50 ETF (588000) has exceeded 100 billion, doubling from the beginning of the year.
Specifically, the share of the Science and Technology Innovation 50 (588000) increased significantly, with an increase of 55.256 billion shares from the beginning of the year, followed by the share growth of the Science and Technology Innovation Board 50 ETF (588080), CSI 300 ETF E Fund (510310), CSI 300 ETF (510300), ChiNext ETF (159915), ChiNext 50 ETF (159949) and SSE 50 ETF (510050). In addition, a number of ETFs tracking the STAR 100 Index established during the year saw significant growth in shareholding.
It is worth mentioning that in the fourth quarter, the "national team" increased its position in ETFs many times, including Central Huijin Company's increase in broad-based ETFs, and Guoxin Investment's increase in CSI Guoxin Central Enterprises Technology Index Fund.
2. Game ETFs take the lead, and photovoltaic ETFs rise sharply at the end of the year to get rid of the "crane tail"
(1) Game ETFs led the way in other sectors and thematic ETFs
Benefiting from the AI wave at the beginning of the year, the performance of the game ETF has maintained a leading trend during the year, with an increase of more than 110% during the year, becoming a "doubling base" and far ahead among many ETFs. Although at the end of the year, due to the release of the "Measures for the Administration of Online Games (Draft for Solicitation of Comments)" issued by the National Press and Publication Administration, the game-related ETFs fell into a pullback, and many game ETFs have narrowed their returns to less than 30% this year, but game ETFs still lead the rise of other industries and thematic ETFs. It is worth mentioning that when the animation and game ETF fell, market funds continued to "buy the bottom". Wind data shows that as of December 27, game ETFs (516010) and game ETFs (159869) have recently received net inflows.
Huatai Securities believes that the "Measures for the Administration of Online Games (Draft for Solicitation of Comments)" is based on promoting the prosperity and healthy development of the industry and standardizing the order of the industry, which may have a certain degree of impact on the current monetization of game companies. However, at present, the draft is not the final regulatory provisions, and the specific impact needs to be further assessed according to the specific provisions of the subsequent formal management measures. On December 23, the relevant person in charge of the State Press and Publication Administration also said that the "Draft Opinions" will be carefully studied and will listen to the opinions of many parties to further revise and improve.
(2) Communications ETFs followed
In addition to game ETFs, with the blessing of optical communication and the concept of "special valuation", the performance of the communication sector this year has handed in a brilliant "report card", and the communication ETF (515880) has risen by more than 23% this year.
It is worth noting that the rise in the communication sector cannot avoid the concept of AI. The construction of AI large models is inseparable from the underlying infrastructure - optical communication. Optical communication is a communication method with light waves as the carrier, and has become the most mainstream information transmission method in the world. As a key device to realize photoelectric conversion in the optical communication system, optical modules are also the most expensive link in the optical communication industry chain, known as the base of AI computing power, and have become one of the hottest concepts in the stock market this year. The super performance of optical modules drives the entire optical communication industry chain to strengthen and contributes super alpha to the communication industry.
In addition, the China State-owned Enterprises ETF (517180), the State-owned Enterprises Win-Win ETF (159719) and the Media ETF (159805) also performed well, with returns above 18% for the year.
(3) PV ETFs get rid of the "crane tail"
There are three main types of ETFs with the "worst" theme and industry this year, namely tourism, photovoltaic and new energy ETFs.
Unexpectedly, in 2023, two companies tracking the CSI Tourism Index (930633. CSI) ETFs were among the top losers, with two ETFs hitting record lows on December 27. As of December 28, the travel ETF (159766) and the travel ETF (562510) both fell by about 38%.
Approaching the end of 2023, track stocks such as photovoltaic and lithium batteries have risen sharply, reversing the situation of "crane tail". However, the decline of the photovoltaic industry this year is obvious to all.
In 2023, the price of polysilicon has fallen from the highest price of 330,000 yuan/ton to the lowest price of 60,000 yuan/ton in just one year, which has also driven the prices of downstream products to fall one after another. The price of products in all links continued to fall, although the cost of power generation was significantly reduced to a certain extent, but the low price of photovoltaic manufacturing products caused huge operating pressure on enterprises.
The A-share photovoltaic sector has fluctuated downward since the end of January, and photovoltaic equipment (Shenwan) has fallen by more than 38% during the year. At its peak, nearly 10 companies with a market value of 100 billion yuan emerged in the A-share photovoltaic sector, involving polysilicon, silicon wafers, inverters and modules. Photovoltaic ETFs also fell sharply, with the PV 30 ETF (560980) falling by more than 35%, and the rest tracking the PV industry index (931151. CSI) PV ETF is down more than 30% for the year.
In addition, a number of new energy-themed ETFs also fell by more than 35%, among which the leading new energy ETF (159752) fell by nearly 36%.
Driven by the expectation of interest rate cuts, the sector has been adjusted at the end of the quarter, and the sector has rebounded this week (December 18-December 24), with inverters, photovoltaics and lithium batteries rising greatly. It should be pointed out that it still takes time for production capacity to clear and consumption to ease, the fundamentals of the plate are close to the bottom but have not yet bottomed out, interest rate changes are good for new energy, and the plate has entered the game range of over-falling rebound. In terms of investment, we believe that the export of distribution networks, UHV and power equipment under the consumption logic can be used as a basic disk, and after the income range is opened, the rebound will give priority to lithium mines/electrolytes/batteries, supercharging piles, inverters and integration, and new technologies.
3. Gold ETFs rose by more than 15% during the year, but many gold ETFs were "urgent" in scale
Commodity ETFs have performed well this year, except for non-ferrous ETFs (159980), which fell slightly, 16 commodity ETFs have positive yields this year, and even many gold ETFs have risen by more than 16%, of which gold fund ETFs (518800) have risen by more than 17%.
Looking back on the whole year of 2023, the multiple rounds of sharp rises in gold prices since the beginning of this year are closely related to the escalation of international geopolitical risks and the violent turmoil in the financial market. Specifically:
- At the start of the year, gold prices rallied sharply, driven by a weaker dollar and sliding 10-year Treasury yields, but plunged as the Federal Reserve announced a 25 basis point rate hike in early February.
- In March, the sudden banking crisis in Europe and the United States continued to spread, safe-haven funds poured in, gold prices continued to rise, and on May 4, the spot price of gold once rushed to $2,080 / ounce, a record high. On the same day, the COMEX June gold futures price also rose to $2085.40 per ounce intraday, approaching an all-time high.
- In the second and third quarters, as risk events were digested by the market and the Fed's interest rate hike expectations continued to be disturbed, gold prices fell from their highs and came under pressure.
- In the fourth quarter, a new round of conflict broke out between Palestine and Israel, and gold rose throughout October, coupled with the Fed's "dove-release", and the price of gold futures in New York and spot gold in London hit record highs in December. Since October, the price of gold has risen sharply from $1,810 per ounce again, and on December 4, gold futures in New York hit an intraday high of $2,152.3 per ounce, and spot gold in London hit an intraday high of $2,146.7 per ounce.
At the same time, since the beginning of this year, due to the impact of the exchange rate, the price of RMB-denominated gold has been stronger than the international gold price. Since about July, the spread between domestic and foreign gold prices has risen sharply. Until November, the renminbi exchange rate rose, and the Shanghai gold premium also narrowed. The price of Shanghai gold futures also fluctuated from a low of 412.27 yuan/gram at the beginning of the year, and also hit a high of 486.48 yuan/gram on December 4.
It is worth mentioning that, judging from the current scale of commodity ETFs, the scale of many commodity ETFs is less than 100 million yuan, and it is necessary to pay attention to the risk of liquidation. According to the relevant regulations, during the duration of the open-end fund contract after it takes effect, if the net asset value of the fund is less than 50 million yuan for 60 consecutive days, or the number of fund unit holders for 60 consecutive days does not reach 200, the fund manager has the right to announce the termination of the fund after approval by the China Securities Regulatory Commission.
Everbright Securities believes that the U.S. dollar index may weaken in 2024, which is good for gold prices. The negative correlation between gold and the U.S. dollar index has increased significantly, and the correlation coefficient between gold and the U.S. dollar index reached -0.79 from March 1, 2022 to November 30, 2023. The U.S. manufacturing PMI was 46.7 in November, shrinking for 13 consecutive months and the longest contraction cycle in 20 years. Looking forward to 2024, the slowdown in U.S. economic growth is a high probability event, the relative advantage of the U.S. economy over non-U.S. economies is no longer there, and the U.S. dollar index may continue to decline, which is good for gold prices.
Huafu Securities believes that the end of the U.S. interest rate hike cycle, the weakening of the U.S. dollar to reduce the suppression of precious metals, while the geopolitical turmoil strengthens the market hedging demand, precious metal prices still rise;
4. The difference between the first and last performance of cross-border ETFs is 84%, but the funds are "buying more and more"
Since the beginning of this year, the performance of cross-border ETFs has been polarized, with a difference of 84% between the first and last results. Cross-border ETFs tracking the Nasdaq 100 continued to lead the rally and hit new highs, while ETFs investing in Hong Kong stocks have been falling and falling endlessly, and their performance has repeatedly refreshed their stage lows, and the performance of Hong Kong stocks has almost been at the bottom.
Specifically, 4 ETFs tracking the Nasdaq 100 Index have returned more than 50% this year, becoming the biggest winners. Among them, the Nasdaq ETF (159632) has risen by 58.54% this year, and the Nasdaq ETF (159941), Nasdaq ETF (513100) and Nasdaq ETF (513300) have also returned more than 50% this year. In some years, the newly issued Nasdaq 100 ETF has also seen a wave of rise, with an increase of more than 30%.
In addition, some ETFs tracking the S&P 500 ETF, tracking the Nikkei 225 Index ETF, and tracking indices such as China-Korea Semiconductor, France's CAC40, and the Topix Index have all risen by more than 20% this year.
On the other hand, Hong Kong stocks-related ETFs, which are also cross-border ETFs, have repeatedly refreshed their stage lows, and the performance rankings of Hong Kong stocks-related ETFs have fallen almost across the board, of which 12 Hong Kong stock-related ETFs have fallen by more than 20%. Among them, the Hong Kong Stock Connect Pharmaceutical ETF (159776) fell by nearly 26%, and the performance of the first-ranked Nasdaq ETF (513300) was 84%.
On the whole, the performance of the global capital market is mixed, and the Hong Kong stock market is sluggish, but funds prefer the falling Hong Kong stock ETF, and use the ETF to "buy more and more" to invest in Hong Kong stocks, while most of the funds in non-Hong Kong stock ETFs choose to "take profits". Thanks to the sharp increase in the share of cross-border ETFs related to Hong Kong stocks, the share of cross-border ETFs increased by 62% from 165.5 billion at the beginning of the year to 431.7 billion.
The 10 cross-border ETFs with the most obvious increase in share are all Hong Kong stock ETFs that have been "falling endlessly" this year, among which Hang Seng Internet ETF (513330) has fallen by nearly 25% this year, but its share has increased by 32.5 billion to 85.8 billion, and the shares of Hang Seng Technology Index ETF (513180), Hang Seng Medical ETF (513060), Hong Kong Stock Connect Internet ETF (159792), and Hang Seng Technology ETF (513130) have increased by more than 10 billion shares. Although the S&P 500 (513500) rose by nearly 28%, many investors chose to "take profits", and their share decreased by 2.1 billion.
Guosen Securities predicts that in the second quarter of 2024, the Fed will cut interest rates and stop shrinking its balance sheet, and may cut interest rates 3 to 4 times throughout the year. Such a policy change could lead to a rally in equities, but liquidity concerns are likely to be a key factor in the second quarter of 2024. Galaxy Securities also pointed out that before the Fed actually cuts interest rates, if the market forms a consensus expectation of interest rate cuts in advance, Hong Kong stocks may rebound;
5. Bond ETFs are "stable and happy", and the overall trading activity will increase in 2023
Compared with equity ETF products, the current bond ETF is still a niche product, but due to factors such as the continued volatility of the equity market, the performance of bond ETFs in 2023 will be more impressive, and the trading activity will increase.
Specifically, in 2023, except for the convertible bond ETF (511380) or a slight decline in equity marketing, the rest of the annual returns will be positive, which can be said to be "stable happiness".
In 2023, the bond market will outperform the equity market first:
- In the first half of the year, bonds as a whole showed a bull market, with good economic data from January to February, and strong market expectations for economic growth, pushing long-term bond yields upward. Since March, under the resonance of multiple positive factors such as the weakening of economic data month-on-month, the imbalance between supply and demand of credit bonds, the loosening of liquidity, and the reduction of deposit interest rates by banks, the yields of bonds of various maturities have been pushed down, and the maturity spreads and credit spreads of credit bonds have been compressed across the board.
- In the second quarter, the "weak reality" began to gradually pick up, the economic recovery slowed, expectations weakened, and yields fell rapidly.
- Since the third quarter, driven by the reduction of policy interest rates and allocation demand, bond yields have fallen to the lowest level of the year, and from August to late October, the marginal tightening of the capital side, superimposed on the further optimization of real estate sales policies, and the demand of some institutions to take profits in the fourth quarter, the bond market has been adjusted to a certain extent.
- From late October to the present, the bond market as a whole has shown a volatile market.
However, the bond market has performed slightly better than the equity market in 2023. Huaan Securities analysis said that from the overall perspective of major types of assets, since the beginning of this year, the economic recovery is not as expected, the fundamental data is weak, the policy is loose and the stock market is uncertain. As a result, risk assets such as equity markets and commodity markets have fallen significantly, especially the equity market is more volatile, and the market style is biased towards bonds with anti-risk strategies.
From the perspective of trading activity, the average daily turnover and average daily turnover rate of bond ETFs in 2023 will increase compared with 2022. Specifically, the average daily turnover rate and turnover of most bonds ETF2023 year have increased compared with 2022. Among them, the average daily turnover of short-term financing ETF (511360) is 7.714 billion yuan, and the highest average daily turnover rate is Shanghai Stock Exchange Convertible Bond ETF (511180), with an average daily turnover rate of 109.07% in 2023.
For currency ETFs, the share of this type of ETF will decline the most in 2023, with a decrease of 53.4 billion shares during the year, a decrease of nearly 20%. Specifically, the scale of the three 100-billion-level currency ETFs - currency ETF (511600), Yinhua Rili ETF (511880) and Huabao Tianyi ETF (511990) has shrunk to varying degrees.
Looking further ahead, how will interest rates go in 2024? Most institutions believe that interest rates are expected to fluctuate and decline in 2024:
Based on the analysis of credit and inflation, Industrial Securities believes that the 10-year treasury bond yield will still fall in 2024, but it may be disturbed by the replenishment cycle in the downward trend.
Founder Securities and Soochow Securities believe that the structural asset shortage in the bond market still exists, which will drive interest rates downward. According to the analysis of Founder Securities, the shortage of structural assets may continue in 2024. In the context of localized bonds, the approval of urban investment bonds is gradually stricter, which will limit urban investment bonds in the future. From the demand side, the growth rate of social finance is still lower than the growth rate of M2, and the expansion of the asset side of the financial system is still weaker than the liability side, which means that the structural asset shortage may continue. Soochow Securities believes that from the long-term trend, the phenomenon of "asset shortage" still exists, and in the context of abundant funds and scarce assets, the demand for bonds is strong, driving interest rates downward.
However, there are also institutions that hold the opposite view on the trend of interest rates:
Kaiyuan Securities said that in the past two years, the yields of the Sino-US bond market have diverged, and the interest rate spread has been deeply inverted. 2024 is expected to see a downward inflection point in US bond yields, but this will not necessarily lead to a downward trend in China's bond market yields, and the core of China's bond market trend is still fundamentals. At present, the domestic economy is in the second quarter of the recovery stage, despite fluctuations, but the recovery trend of the return to the potential economic growth rate is more certain, the policy counter-cyclical adjustment increases, the bottom of the real estate stabilization, superimposed on the global manufacturing three-year cycle upward, the recovery trend of the economy in 2024 to continue to return to the potential economic growth rate is more certain. It is believed that bond market yields may fluctuate to the upside in 2024.
Galaxy Securities pointed out that long-end interest rates fluctuate widely, easy to go up and down and difficult to go down.
(The information in this article does not constitute any investment advice, and the content published is from licensed securities institutions and does not represent the views of the platform. ）
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